Annual Results for the Year Ended 30 September 2020
Results for announcement to the market
Name of issuer Gentrack Group Limited
Reporting Period 12 months to 30 September 2020
Previous Reporting Period 12 months to 30 September 2019
Currency NZD
Amount (000s) Percentage change
Revenue from continuing
operations
$100,533 (9.98%)
Total Revenue $100,533 (9.98%)
Net profit/(loss) from
continuing operations
($ 31,706) 856.45%
Total net profit/(loss) ($ 31,706) 856.45%
Interim/Final Dividend
Amount per Quoted Equity
Security
No dividend payable
Imputed amount per Quoted
Equity Security
Not Applicable
Record Date Not Applicable
Dividend Payment Date Not Applicable
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
($ 0.019)
$0.027
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
For commentary on the results please refer to the market
release, financial statements and investor presentation attached
Authority for this announcement
Name of person
authorised
to make this announcement
Jon Kershaw
Contact person for this
announcement
Jon Kershaw
Contact phone number +64 9 966 6090
Contact email address Jonk@gentrack.com
Date of release through MAP
26/11/2020
Audited financial statements accompany this announcement.
---
Gentrack Group Ltd | www.gentrack.com | info@gentrack.com | ARBN 169 195 751
MARKET ANNOUNCEMENT
26 November 2020
Gentrack Full year results to 30 September 2020
Gentrack Group Limited (NZX/ASX: GTK), a leading provider of software solutions for utilities
and airports, today released its results for the year to 30 September 2020.
Results Summary
• Revenue: $100.5m - down 10% on FY19
• Committed Monthly Recurring Revenue: $56.7m – up 18% on FY19
• EBITDA
1
: $12.1m - down 51% on FY19
• Statutory NPAT: ($31.7m) – driven by non-cash write-downs
• Adjusted NPAT
2
: $2.4m
• Net cash: $16.8m up $12.2m on FY19
• No Final Dividend payable
The results for the year show underlying EBITDA of $12.1m, down 51% on FY19, off the back of
lower FY20 revenues coming in at $100.5m, a 10% decrease on FY19. Despite the decline,
Annual Recurring and Committed Monthly Recurring Revenues for the year have increased by
4.9% and 18% respectively reflecting new utilities business in Australia and the UK, and net
growth in the meter points for existing customers in these regions. It also reflects new airports
business won in the year in Australia, North America and Europe.
Net Cash at 30 September 2020 has increased by $12.2m over the same period last year,
marking a strong year in cash generation. Costs were down by $3.2m in H2’20 (vs H1’20)
reflecting the impact of the cost-out programme in March 2020, COVID-19 cost reductions and
other savings measures.
The Group has recorded a Statutory NPAT loss of $31.7m for the full year including an
impairment charge of $34.5m primarily related to goodwill impairments in both the Blip and
Utilities businesses, reflecting uncertainty in the outlook.
In light of the NPAT loss, the Board has taken the decision not to pay a final dividend.
CEO Gary Miles said, “ The results reflect a tough year for our utilities and airports customers.
Pleasingly the revenue mix and shift in annual recurring revenues is positive. We see
opportunities in our markets and our strong net cash position sets us up to accelerate our
technology investment and lead the industry as it transforms to the cloud and clean
technologies. This year we’ve also played a key role in enabling our customers to adapt to
COVID, keeping their mission critical systems operational and ready to support customer
hardship at this time.”
1
EBITDA: Earnings before depreciation, amortisation, impairments and non-operating expenses related to acquisitions.
2
Adjusted NPAT - Underlying NPAT adjusted for the impairment of Goodwill and intangible assets
Gentrack Group Ltd | www.gentrack.com | info@gentrack.com | ARBN 169 195 751
“Coming into the business in October, I’m energised by the strong management team,
including recent hires, and the passion and experience of our people. We’re in a good position
to bring innovative cloud solutions as a key advantage for energy, water and airports
customers.”
As stated at the half year, COVID-19 had no operational impact on the business in H1. The full
year results however have been impacted by global economic events with some delays in
utilities projects and more significant delays in airports programmes.
The Utilities business achieved a 4.3% increase in Annual Recurring Revenue, with overall
revenue of $81.8m for the year declining by 7.3% due to the completion of prior projects and
customer losses, driven by supplier insolvencies, consolidations and competitive activity in the
UK. In Australia, key billing and customer management projects were started and put live
contributing to the increase in Annual Recurring Revenues and a subsequent decline in non-
recurring revenues.
Veovo has recorded revenues of $18.8m, down 20% on FY19, capping off a tough year for the
airports industry globally with revenue for many airports being reduced by over 80% as COVID-
19 travel restrictions were implemented. Airport operation systems are an essential service to
the aviation industry which has enabled Veovo to remain profitable. Numerous projects were
completed throughout the year in Europe, North America and Australia.
As per the outlook given in September, Gentrack continues to see market opportunities and
has plans for ongoing investment in new cloud technology and the skills required to compete.
It is expected that the full year EBITDA
1
run rate for FY21 will be well below that of the H2 FY20
run rate, however, this may reduce FY21 profitability closer to break-even depending on the
levels of future product investment and other factors.
A further update will be provided at the Annual Meeting in February.
All figures are presented in NZ$.
ENDS
*******
Contact:
James Spence, CFO
+64 9 966 6090
*******
Gentrack Group Ltd | www.gentrack.com | info@gentrack.com | ARBN 169 195 751
Full Year Results Investor Briefing Details
Gentrack Group Limited (NZX/ASX: GTK) invites investors to a conference call on Thursday 26
November 2020 at 11:30am NZT / 9.30am ADST (duration 1 hour) to review Gentrack’s results
for the full year ended 30 September 2020.
This investor briefing will be available via a webcast (presentation slides and audio only) or
‘audio only’ service. Please follow the instructions outlined below to access the event.
The audio recording from the briefing will be made available in the Gentrack Investor Centre
(https://www.gentrack.com/investors) following the call.
Webcast Instructions
To join the investor briefing online, click on the link below to view, listen to and ask questions
on the Investor presentation directly from your laptop, tablet or mobile device. Please note if
you are using the Webcast option, it is not necessary to dial into the audio conference as well,
unless you wish to ask verbal questions during Q&A. Audio will stream through your selected
device, so be sure to have headphones or your volume turned up. If you have technical
difficulties, please click the “Listen by Phone” button on the webcast player and dial the
number provided.
https://globalmeet.webcasts.com/starthere.jsp?ei=1393948&tp_key=de45d764be
Audio only – Participant Access Instructions
For the ‘audio only’ option, you can access the investor briefing from your phone. Please join
the briefing 5-10 minutes prior to the start time. You will be asked to provide the event name,
your name and participant passcode as below:
- Event Name: Gentrack Investor Briefing
- Participant Passcode: 563617
(Following entry, please provide the required details when prompted)
The dial-in numbers for available locations are listed below.
- Australia Tollfree/Freephone 1 800 590 693
- Australia, Brisbane Local +61 (0)7 3105 0937
- Australia, Melbourne Local +61 (0)3 8317 0929
- Australia, Sydney Local +61 (0)2 9193 3719
- Denmark Tollfree/Freephone 80 70 16 37
- Denmark, Copenhagen Local +45 35 15 80 48
- Hong Kong Tollfree/Freephone 800 961 113
- Hong Kong Local +852 3008 1533
- Ireland Tollfree/Freephone 1800 936 706
- Ireland, Dublin Local +353 (0)1 246 5637
- New Zealand Tollfree/Freephone 0800 423 972
- New Zealand, AKL Local +64 (0)9 9133 624
- Singapore Tollfree/Freephone 800 186 5106
Gentrack Group Ltd | www.gentrack.com | info@gentrack.com | ARBN 169 195 751
- Singapore Local +65 6320 9041
- United Kingdom Tollfree/Freephone 0800 358 6374
- United Kingdom Local +44 (0)330 336 9104
- United States, LA Local +1 323-794-2095
- United States/Canada Tollfree/Freephone 866-519-2796
Questions can be submitted online via the Webcast platform or the audio call system when
prompted. Personal information provided for the purpose of registration will not be disclosed
to any third parties and will only be used by Gentrack to manage participant interaction.
About Gentrack
Gentrack designs, builds and delivers the high-performing, cloud-first revenue and customer
experience solutions found at the heart of leading utilities and airports around the world. Our
customers lead in some of the most deregulated and innovative markets in the world;
pioneering innovation, driving effective transformation in the management and delivery of two
of our planet’s most precious resources; energy and water.
More information: www.gentrack.com
Gentrack Group Ltd | www.gentrack.com | info@gentrack.com | ARBN 169 195 751
Appendix
NON-GAAP PROFIT REPORTING MEASURES
Gentrack’s standard profit measure prepared under New Zealand GAAP is net profit. Gentrack
has used non-GAAP profit measures when discussing financial performance in this document.
The directors and management believe that these measures provide useful information as
they are used internally to evaluate performance of business units, to establish operational
goals and to allocate resources.
Non-GAAP profit measures are not prepared in accordance with NZ IFRS (New Zealand
International Financial Reporting Standards) and are not uniformly defined, therefore the non-
GAAP profit measures reported in this document may not be comparable with those that other
companies report and should not be viewed in isolation or considered as a substitute for
measures reported by Gentrack in accordance with NZ IFRS.
Definitions
EBITDA: Earnings before depreciation, amortisation, impairments and non-operating expenses
related to acquisitions.
FY20 Adjusted NPAT Reconciliation
12 Months
30 September 20
NZ$m
Reported net (loss)/profit after tax (31.7)
Goodwill and intangible impairment 34.5
Less: Deferred tax impact of intangible impairment (0.4)
Adjusted NPAT 2.4
GAAP to non-GAAP profit reconciliation
3
12 Months 12 Months
Period NZ$m 30 Sep 19 30 Sep 20
Reported net profit/(loss) for the period (GAAP) (3.3) (31.7)
Add: Net finance expense 0.8 0.4
Less: Income tax (benefit) / expense
3.7 (2.6)
Add: Depreciation and amortisation 9.4 (12.4)
Less: Revaluation and acquisition related liability (0.4) (0.9)
Add: Impairment of goodwill and intangible assets 14.6 34.5
EBITDA 24.8 12.1
3
Extracted from audited full year financial statements.
---
FINANCIAL
STATEMENTS 2020
CONTENTS
2 Auditor’s Report
6 Directors’ Responsibility Statement
7 Statement of Comprehensive Income
8 Statement of Financial Position
9 Statement of Changes in Equity
10 S
tatement of Cash Flows
11 Notes to the Financial Statements
© 2020 KPMG, a New Zealand Partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International
Limited, a private English company limited by guarantee. All rights reserved.
Independent Auditor’s Report
To the shareholders of Gentrack Group Limited
Report on the audit of the consolidated financial statements
Opinion
In our opinion, the accompanying consolidated
financial statements of Gentrack Group Limited
(the ’company’) and its subsidiaries (the 'group') o n
pages 7 to 43:
i.present fairly in all material respects the Group’s
financial position as at 30 September 2020 and its
financial performance and cash flows for the year
ended on that date; and
ii.comply with New Zealand Equivalents to
International Financial Reporting Standards and
International Financial Reporting Standards.
We have audited the accompanying consolidated
financial statements which comprise:
— the consolidated statement of financial
position as at 30 September 2020;
— the consolidated statements of
comprehensive income, changes in equity
and cash flows for the year then ended; and
— notes, including a summary of significant
accounting policies and other explanatory
information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (‘ ISAs (NZ)’) . We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the group in accordance with Professional and Ethical Standard 1 International Code of
Ethics for Assurance Practitioners (Including International Independence Standards) (New Zealand) issued by the
New Zealand Auditing and Assurance Standards Board and the International Ethics Standards Board for
Accountants’ International Code of Ethics for Professional Accountants (including International Independence
Standards) (‘IESBA Code’), and we have fulfilled our other ethical responsibilities in accordance with these
requirements and the IESBA Code.
Our responsibilities under ISAs (NZ) are further described in the auditor’s responsibilities for the audit of the
consolidated financial statements section of our report.
Our firm has also provided other services to the group in relation to tax compliance, tax advisory and other
assurance services. Subject to certain restrictions, partners and employees of our firm may also deal with the
group on normal terms within the ordinary course of trading activities of the business of the group. These
matters have not impaired our independence as auditor of the group. The firm has no other relationship with, or
interest in, the group.
Materiality
The scope of our audit was influenced by our application of materiality. Materiality helped us to determine the
nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually
and on the consolidated financial statements as a whole. The materiality for the consolidated financial
statements as a whole was set at $1m determined with reference to a benchmark of group Revenue. We chose
the benchmark because, in our view, this is a key measure of the group’s performance.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the consolidated financial statements in the current period. We summarise below those matters and our key
audit procedures to address those matters in order that the shareholders as a body may better understand the
process by which we arrived at our audit opinion. Our procedures were undertaken in the context of and solely
for the purpose of our statutory audit opinion on the consolidated financial statements as a whole and we do not
express discrete opinions on separate elements of the consolidated financial statements.
The key audit matter How the matter was addressed in our audit
1.Revenue from implementation services
Refer to note 3.2 of the consolidated
financial statements.
The Group has reported revenues of
$101m (2019: $112m) which includes
implementation services revenue of
$15m. We focused on the revenue
from implementation services as a key
audit matter due to inherent
complexities of software
implementation projects and the
estimates involved.
Revenue from implementation
services is recognised based on the
stage of completion calculated using
either the proportion of actual hours at
the reporting date compared to
managements estimates for total
forecast hours or with reference to
milestones.
Accurate recording of revenue is
highly dependent on:
— Detailed knowledge of individual
characteristics of a contract,
including unique terms,
knowledge of software and length
of time to complete contractual
milestones;
— Ongoing adjustments to
estimated hours to complete
implementation taking into
consideration changes in scope,
estimated timing and project
delays; and
— Changes to total project revenue
for contract variations or additional
billing for changes in scope or
additional hours incurred.
We focused our procedures on the implementation service projects that
were in progress at balance date based on the significance of
implementation service revenue to the total revenue of the Group.
For the projects selected for testing we checked that revenue
recognised is consistent with contractual terms, including considering
how the initial licence fee, design and implementation, and
maintenance phases of the contract are arranged.
We recalculated the stage of completion based on hours to date as a
proportion of total forecast hours or with reference to milestones. We
also inspected a sample of milestone billings and compared those to
invoice and cash receipts and considered the reasonableness of the
related balance sheet positions.
We assessed the forecast hours through discussion with project
managers and senior management and challenged key assumptions,
including consideration of alternative scenarios and how management
addressed risks in the contract.
We compared significant changes in total forecast hours to
correspondence with customers, legal documentation or contract
variations. We evaluated potential exposure to liquidated damages by
reviewing legal correspondence and correspondence with customers.
We also considered the historical accuracy of managements’ estimates
of forecast hours by analysing previous forecasts to actual hours.
The key audit matter How the matter was addressed in our audit
2.Impairment assessment
Refer to notes 5.3 and 5.4 of the
consolidated financial statements.
Impairment assessment is considered
a key audit matter due to the
subjective nature of impairment
models and the significant
judgements and estimates
management uses to determine the
expected financial performance and
value in use of the Group’s cash
generating units. This requires
management to make assumptions in
relation to forecasted cash flows, the
terminal growth rate and discount
rates used in a discounted cash flow
model.
As a result of management’s
impairment assessment, goodwill,
intangibles and capitalised
development amounting to $34m has
been impaired during the financial
year.
To evaluate management’s assessment of the carrying value of the
respective cash generating units:
— We considered management’s conclusion on separately identifiable
cash generating units.
— We assessed the significant future cash flow assumptions by
comparing actual results to business plans, strategies and budgets.
We examined the documentation supporting the budgeting process
and inspected the forecasted pipeline for FY 2021.
— Our corporate finance specialists examined whether the
methodology adopted in the discounted cash flow value in use
models are consistent with accepted valuation approaches within
the software industry. In addition, our specialists assessed the
mathematical accuracy of the models, and considered whether the
discount and terminal growth rate assumptions applied to the
estimated future cash flows are within an acceptable range for the
industry and lifecycle of the businesses.
— We challenged the assumptions and judgements used by
management by performing sensitivity analysis, considering a
range of likely outcomes based on various scenarios.
— Where management concluded impairment is necessary (Blip
Systems A/S and Utilities), we considered the extent of impairment
with reference to historic performance, future business plans and
pipelines, and degree of uncertainty in relation to future financial
performance.
— We also assessed the reasonableness of the incurred impairment
expense by comparing the carrying value of cash generating units
to the market capitalisation value as of 30 September 2020.
To evaluate management’s assessment of the carrying value of
capitalised development we assessed the probability of future
economic benefits arising from capitalised development by considering
future revenue pipelines attributed to each type of capitalised
development recognised on the balance sheet.
Other information
The Directors, on behalf of the group, are responsible for the other information included in the entity’s Annual
Report. Other information may include the Chairman and Chief Executive’s report and disclosures relating to
corporate governance. Our opinion on the consolidated financial statements does not cover any other
information and we do not express any form of assurance conclusion thereon.
The Annual Report is expected to be made available to us after the date of this Independent Auditor's
Report. Our responsibility is to read the Annual Report when it becomes available and consider whether the
other information it contains is materially inconsistent with the consolidated financial statements, or our
knowledge obtained in the audit, or otherwise appear misstated. I f so, we are required to report such matters to
the Directors.
Use of this independent auditor’s r eport
This independent auditor’s report is made solely to the shareholders as a body. Our audit work has been
undertaken so that we might state to the shareholders those matters we are required to state to them in the
independent auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the shareholders as a body for our audit work, this independent
auditor’s report, or any of the opinions we have formed.
Responsibilities of the Directors for the consolidated financial
statements
The Directors, on behalf of the company, are responsible for:
— the preparation and fair presentation of the consolidated financial statements in accordance with generally
accepted accounting practice in New Zealand (being New Zealand Equivalents to International Financial
Reporting Standards) and International Financial Reporting Standards;
— implementing necessary internal control to enable the preparation of a consolidated set of financial
statements that is fairly presented and free from material misstatement, whether due to fraud or error; and
— assessing the ability to continue as a going concern. This includes disclosing, as applicable, matters related
to going concern and using the going concern basis of accounting unless they either intend to liquidate or to
cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the consolidated financial
statements
Our objective is:
— to obtain reasonable assurance about whether the consolidated financial statements as a whole are free
from material misstatement, whether due to fraud or error; and
— to issue an independent auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with ISAs NZ will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these
consolidated financial statements.
A further description of our responsibilities for the audit of these consolidated financial statements is located at
the External Reporting Board (XRB) website at:
http://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-1/
This description forms part of our independent auditor’s report.
The engagement partner on the audit resulting in this independent auditor's report is Jason Doherty.
For and on behalf of
KPMG
Auckland
26 November 2020
DIRECTORS’ RESPONSIBILITY STATEMENT
DIRECTORS’ RESPONSIBILITY STATEMENT/6
The Directors are required to prepare financial statements for each financial year that present fairly the financial position of Gentrack
Group and its operations and cash flows for that period.
The Directors consider these financial statements have been prepared using accounting policies suitable to Gentrack Group’s
circumstances, which have been consistently applied and supported by reasonable judgements and estimates, and that all relevant
financial reporting and accounting standards have been followed.
The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy, at any time, the financial
position of Gentrack Group and to enable them to ensure that the financial statements comply with the Companies Act 1993. They are also
responsible for safeguarding the assets of Gentrack Group and hence for taking reasonable steps for the prevention and detection of fraud
and other irregularities.
The Board of Directors of Gentrack Group authorised these financial statements for issue on 26 November 2020.
For and on behalf of the Board of Directors:
Andy Green Fiona Oliver
Chairman
Date: 26 November 2020
Director
Date: 26 November 2020
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 SEPTEMBER 2020
STATEMENT OF COMPREHENSIVE INCOME/7
NOTES
2020
NZ$000
2019
NZ$000
Revenue 3.2,3.3 100,533 111,682
Expenditure 3.4 (88,440) (86,869)
Profit before depreciation, amortisation, revaluation of financial
liabilities, impairment of goodwill and intangible assets,
financing and tax
12,093 24,813
Depreciation and amortisation 3.5 (12,354) (9,440)
Revaluation of acquisition related financial liability 5.8 891 384
Impairment of goodwill and intangible assets 5.2,5.3,5.4
(34,511) (14,551)
(Loss)/Profit before financing and tax
(33,881) 1,206
Net finance expense 3.6 (386) (763)
(Loss)/Profit before tax (34,267) 443
Income tax benefit/(expense) 7.1 2,561 (3,758)
Loss attributable to the shareholders of the company (31,706) (3,315)
OTHER COMPREHENSIVE INCOME
Translation of international subsidiaries (882) (1,675)
Total comprehensive loss for the period
(32,588) (4,990)
EARNINGS PER SHARE FOR LOSS ATTRIBUTABLE TO THE
SHAREHOLDERS OF THE COMPANY
(EXPRESSED IN DOLLARS PER SHARE)
Basic earnings per share 6.4 ($0.32) ($0.03)
Diluted earnings per share 6.4
($0.32) ($0.03)
WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES ISSUED
Ba
sic 6.4
98,645 98,605
Diluted 6.4
100,053 98,872
The accompanying notes form part of these financial statements.
STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2020
STATEMENT OF FINANCIAL POSITION/8
SECTION
2020
NZ$000
2019
NZ$000
CURRENT ASSETS
Cash and cash equivalents 4.3 19,321 8,626
Trade and other receivables 5.1 18,951 31,279
Inventory 5.9 464 572
Total current assets 38,736 40,477
NON-CURRENT ASSETS
Property, plant and equipment 5.5 2,763 3,453
Lease assets 2.5,9.1 10,338 -
Goodwill 5.2 106,599 134,434
Intangibles 5.4 45,428 60,482
Deferred tax assets 7.2 4,649 2,793
Total non-current assets 169,777 201,162
Total assets 208,513 241,639
CURRENT LIABILITIES
Bank loans 4.2 2,536 4,000
Trade payables and accruals 5.6 3,905 5,487
Lease liabilities 2.5,9.1 2,692 -
Contract liabilities 12,419 12,173
GST payable 3,206 2,030
Financial liabilities 5.8 - 2,451
Employee entitlements 5.7 5,552 4,588
Income tax payable (150) 2,051
Total current liabilities 30,160 32,780
NON-CURRENT LIABILITIES
Related party loan 4.2 - 450
Lease liabilities 2.5, 9.1 12,435 -
Lease incentives 2.5 - 3,028
Employee entitlements 5.7 428 411
Deferred tax liabilities 7.2 4,997 7,361
Total non-current liabilities 17,860 11,250
Total liabilities 48,019 44,030
Net assets 160,494 197,609
EQUITY
Share capital 6.1 191,229 191,229
Share based payment reserve 699 389
Foreign currency translation reserve 6,782 7,664
Retained earnings (38,216) (1,673)
Total equity 160,494 197,609
For and on behalf of the Board who authorised these financial statements for issue on 26 November 2020.
Andy Green Fiona Oliver
Chairman
Date: 26 November 2020
Director
Date: 26 November 2020
The accompanying notes form part of these financial statements.
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2020
STATEMENT OF CHANGES IN EQUITY/9
2020
NZ$000 SECTION
SHARE
CAPITAL
SHARE BASED
PAYMENT
RESERVE
RETAINED
EARNINGS
FOREIGN
CURRENCY
TRANSLATION
RESERVE
TOTAL
EQUITY
Balance as at 1 October 191,229 389 (1,673) 7,664 197,609
Change in accounting policy 2.5 - - (1,833) - (1,833)
Restated total equity at 1 October 191,229 389 (3,506) 7,664 195,776
Loss attributable to the
shareholders of the company
- - (31,706) - (31,706)
Other comprehensive loss - - - (882) (882)
Total comprehensive loss for the
period, net of tax
- - (31,706) (882) (32,588)
TRANSACTION WITH OWNERS
Di
vidend paid 6.3
- - (3,004) - (3,004)
Share based payments 6.2 - 310 - - 310
Balance at 30 September 191,229 699 (38,216) 6,782 160,494
2
019
$000
SHARE
CAPITAL
SHARE BASED
PAYMENT
RESERVE
RETAINED
EARNINGS
TRANSLATION
RESERVE
TOTAL
EQUITY
Balance as at 1 October 190,968 570 15,548 9,339 216,425
Change in accounting policy - - (443) - (443)
1
90,968 570 15,105 9,339 215,982
Profit attributable to the
shareholders of the company
- - (3,315) - (3,315)
Other comprehensive income
- - - (1,675) (1,675)
Total comprehensive income for
the period, net of tax
- - (3,315) (1,675) (4,990)
TRANSACTION WITH OWNERS
Issue of capital - - - - -
Dividend paid
- - (
13,463) - (13,463)
Share based payments
2
61 (181) - - 80
Balance at 30 September
191,229 389 (1,673) 7,664 197,609
The accompanying notes form part of these financial statements.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 SEPTEMBER 2020
STATEMENT OF CASH FLOWS/10
SECTION
2020
NZ$000
2019
NZ$000
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 110,731 108,083
Payments to suppliers and employees
(83,547) (87,154)
Lease liability finance charge 9.1
(931) -
Income tax paid
(4,287) (8,138)
Net cash inflow from operating activities
21,966 12,791
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property, plant and equipment 5.5 (324) (640)
Purchase of intangible assets 5.4
(331) (5,653)
Payment of acquisition related option 5.8
(2,419) -
Net cash outflow from investing activities
(3,074) (6,293)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments for lease liabilities (2,497) -
Drawdown of borrowings
5,007 8,439
Repayment of borrowings
(6,871) (4,000)
Interest (paid)
(375) (679)
Dividends paid 6.3
(3,004) (13,463)
Net cash (outflow) from financing activities
(7,740) (9,703)
Net increase/(decrease) in cash held 11,152 (3,205)
Foreign currency translation adjustment (457) 431
Cash at beginning of the financial period
8,626 11,400
Closing cash and cash equivalents
19,321 8,626
The accompanying notes form part of these financial statements.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS/11
General information Accounting polices Critical judgements
General information
The notes are consolidated into nine sections. Each section contains an introduction and general information which is indicated
by the symbol above. The layout of these financial statements has been streamlined to present them in a way that is more intuitive for
readers to follow. This is achieved by laying out the accounting policies and critical judgements alongside the notes and focusing
information in a way which provides increased clarity and ease of understanding.
The first section details general information about Gentrack Group and guidance on how to navigate through the financial statements.
Accounting policies
The principal accounting policies adopted in the preparation of these financial statements are set out throughout the
document where they are applicable. These policies have been consistently applied to all the years presented, unless otherwise stated.
Certain comparatives have been updated to ensure consistency with current year presentation.
Accounting policies are identified by this symbol above.
Critical judgements
The preparation of the financial statements requires management to make judgements, estimates and assumptions
that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in
relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements and estimates on
historical experience and on various other factors it believes to be reasonable under the circumstances, the result of which form
the basis of the carrying values for assets and liabilities that are not readily apparent from other sources. Actual results may differ
from these estimates under different assumptions and conditions and may materially affect financial results or the financial
position reported in future periods.
Further details of the nature of these critical judgements and estimates may be found throughout the financial statements as they are
applicable and are identified by this symbol.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS/12
1.GENERAL INFORMATION
Gentrack Group Limited is a limited liability company, domiciled and incorporated in New Zealand and registered under the New Zealand
Companies Act 1993. The registered office of the Company is 17 Hargreaves Street, St Marys Bay, Auckland 1011, New Zealand.
The financial statements presented are for Gentrack Group Limited and its subsidiaries for the year ended 30 September 2020. Prior year
comparatives are for the year ended 30 September 2019.
The financial statements of Gentrack Group for the year ended 30 September 2020 were authorised for issue in accordance with a
resolution of the directors on 26 November 2020.
Gentrack Group’s principal activity is the development, integration, and support of enterprise billing and customer management software
solutions for the utility (energy and water) and airport industries.
COVID-19 PANDEMIC
On 11 March 2020, the World Health Organisation declared a global pandemic as a result of the outbreak and spread of COVID-19.
Gentrack Group, like most other organisations is impacted by COVID-19 in a variety of ways, both financially and operationally. During the
period from 11 March 2020 onwards due to restrictions imposed to contain the spread of COVID-19 many businesses were forced to close
or move to remote ways of working. Gentrack Group had the necessary infrastructure in place and had thoroughly tested its ability to
support remote working and during this period Gentrack Group has been able to largely operate as normal. In these challenging times
Gentrack Group has been able to keep its people safe and follow all directions from the Governments where it operates with minimal
operational disruption.
The financial impact of COVID-19 on Gentrack Group has been felt through a reduction in expected revenue, as our customers have
delayed projects. Pleasingly our Utilities customers in the second half of FY2020 have displayed resilience to the impacts of COVID-19 and
continue to interact with Gentrack Group on largely normal terms. However, the longer-t erm implications of COVID-19 are still somewhat
uncertain particularly for the Airport business where our customers have been severely impacted.
Gentrack Group continues to closely monitor the longer-term financial and economic implications of COVID-19 on its operations.
In preparing these financial statements Gentrack Group has considered the increased level of uncertainty resulting from COVID-19 in
applying its accounting estimates and judgements, details of these are provided below:
ACCOUNTING ESTIMATE AND JUDGEMENT AREA REFERENCE
Recoverability of trade receivables Section 5.1
Impairment testing – Five year cashflow forecasts Section 5.3
Blip Systems – full impairment of goodwill and intangibles Section 5.3
Impairment testing – Capitalised Development Section 5.4
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS/13
2.BASIS OF PREPARATION AND ACCOUNTING POLICIES
This section outlines the legislation and accounting standards which have been followed in the preparation of the financial
statements along with explaining how the information has been consolidated and presented.
2.1 KEY LEGISLATION AND ACCOUNTING STANDARDS
The financial statements of Gentrack Group have been prepared in accordance with New Zealand Generally Accepted Accounting Practice
(NZ GAAP). They comply with the New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS) and other applicable
Financial Reporting Standards as appropriate to profit-oriented entities. The financial statements comply with International Financial
Reporting Standards (IFRS).
Gentrack Group is an FMC entity for the purposes of the Financial Reporting Act 2013 and Financial Markets Conduct Act 2013 and is listed
on the New Zealand Stock Exchange (NZX) and the Australian Securities Exchange (ASX).
The financial statements have been prepared in accordance with the requirements of the Financial Reporting Act 2013, Financial Markets
Conduct Act 2013 and the Companies Act 1993.
2.2 BASIS OF CONSOLIDATION
Subsidiaries are entities over which Gentrack Group has control. Gentrack Group controls an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. In
assessing control, potential voting rights that currently are exercisable are taken into account. Subsidiaries are fully consolidated from the
date that control is transferred to Gentrack Group. They are deconsolidated from the date that control ceases.
The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by Gentrack Group.
Intra-group balances and any unrealised income and expenses arising from intra-group transactions, are fully eliminated in preparing the
financial statements.
FUNCTIONAL AND PRESENTATION CURRENCY
Items included in the financial statements of each of Gentrack Group’s entities are measured using the currency of the primary economic
environment in which the entity operates (the functional currency). The financial statements are presented in New Zealand dollars (NZD)
which is Gentrack Group’s presentation currency. All financial information has been presented rounded to the nearest thousand dollars
($000) in the financial statements.
TRANSACTIONS AND BALANCES
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end
exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the s tatement of c omprehensive
income. Foreign exchange gains and losses are presented in the statement of c omprehensive i ncome within net finance expense.
FOREIGN CURRENCY TRANSLATION RESERVE (FCTR)
Gentrack Group translates the results of its foreign operations from their functional currencies to the presentation currency using the
closing exchange rate at balance date for assets and liabilities and the average monthly exchange rates for income and expenses. The
difference arising from the translation of the s tatement of f inancial position at the closing rates and the statement of comprehensive
income at the average rates is recorded within the foreign currency translation reserve within the statement of changes in equity.
2.3 BUSINESS COMBINATIONS
Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is
transferred to Gentrack Group. Control is the exposure or right to variable returns from involvement with the entity and the ability to
affect those returns through power over the entity.
Gentrack Group recognises the fair value of all identifiable assets, liabilities and contingent liabilities of the acquired business. Goodwill is
measured as the excess cost of the acquisition over the recognised assets and liabilities. When the excess is negative (negative goodwill),
the amount is recognised immediately in the statement of comprehensive income.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS/14
2.3 BUSINESS COMBINATIONS (CONTINUED)
Gentrack Group applies the anticipated acquisition method where it has the right and the obligation to purchase any remaining non-
controlling interest (so-called put/call arrangements). Under the anticipated acquisition method, the interests of the non-controlling
shareholder are derecognised when Gentrack Group’s liability relating to the purchase of its shares is recognised. The recognition of the
financial liability implies that the interests subject to the purchase are deemed to have been acquired already. Therefore, the corresponding
interests are presented as already owned by Gentrack Group even though legally they are still non-controlling interests. The initial
measurement of the fair value of the financial liability recognised by Gentrack Group forms part of the consideration for the acquisition.
Gentrack Group has not made any acquisitions during the year ended 30 September 2020 or 2019. For details of acquisitions made in prior
years refer to the 2018 Annual Report.
2.4 GROUP INFORMATION
The financial statements include the following subsidiaries:
ENTITY PRINCIPAL ACTIVITY
COUNTRY OF
INCORPORATION
SHAREHOLDING
2020
SHAREHOLDING
2019
Gentrack Group Australia Pty Limited Holding company Australia 100% 100%
Gentrack Pty Limited Software sales and support Australia 100% 100%
Veovo Holdings (Denmark) ApS Holding company Denmark 100% 100%
Veovo A/S (formally Blip Systems A/S)
Software development sales
and support
Denmark 100% 79.81%
CA Plus Limited
Software development sales
and support
Malta 100% 75%
Veovo Group Limited Holding company New Zealand 100% 100%
Gentrack Limited
Software development sales
and support
New Zealand 100% 100%
Gentrack Holdings (UK) Limited Holding company United Kingdom 100% 100%
Gentrack UK Limited
Software development sales
and support
United Kingdom 100% 100%
Junifer Systems Limited Dormant United Kingdom 100% 100%
Evolve Parent Limited Holding company United Kingdom 100% 100%
Evolve Analytics Limited Dormant United Kingdom 100% 100%
Gentrack (Singapore) Pte Limited Software sales and support Singapore 100% 100%
Veovo Inc Software sales and support USA 100% 100%
Veovo NZ Limited Dormant New Zealand 100% 100%
Veovo UK Limited Dormant United Kingdom 100% 100%
Veovo IP Limited Dormant New Zealand 100% -
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS/15
2.5 ADOPTION OF NEW ACCOUNTING STANDARDS
During the current reporting period Gentrack Group has adopted NZ IFRS 16 Leases (NZ IFRS 16) and has had to change its accounting
policies as a result of adopting this new standard. The impact of adopting NZ IFRS 16 is disclosed below and in further details in section 9.1.
NZ IFRS 16 LEASES – IMPACT OF ADOPTION
NZ IFRS 16 deals with the recognition, measurement, presentation and disclosure of leases and replaces NZ IAS 17 Leases (NZ IAS 17). NZ IFRS
16 introduces a single model for lessees which recognises all leases on the balance sheet through an asset representing the exclusive rights to
use the lease item during the lease term and a liability for the obligation to make lease payments. NZ IFRS 16 removes the distinction between
operating and finance leases and aims to provide the users of the financial statements relevant information to assess the effect that leases
have on the statement of financial position, statement of comprehensive income and cash flows of the reporting entity.
NZ IFRS 16 is effective for Gentrack Group beginning on or after 1 October 2019. Gentrack Group has adopted NZ IFRS 16 using the
modified retrospective transition approach. Under this approach, the cumulative effect of initially applying NZ IFRS 16 is recognised as an
adjustment to retained earnings at 1 October 2019. Comparative figures for the year ended 30 September 2019 are not restated but
instead continue to reflect the accounting policies under NZ IAS 17.
On transition to NZ IFRS 16 Gentrack Group has recognised lease liabilities in relation to leases which were previously classified as
operating leases under NZ IAS 17. These liabilities were measured at the present value of the remaining lease payments discounted using
the lessees incremental borrowing rate as of 1 October 2019. The weighted average lessees incremental borrowing rate applied to these
lease liabilities on 1 October 2019 was 5.68%.
PRACTICAL EXPEDIENTS APPLIED
On transition to NZ IFRS 16, Gentrack Group has used the following practical expedients permitted by the standard:
• Exclusion of initial direct costs for the measurement of the lease asset at the date of initial application;
• Excluded lease contracts of insignificant value;
• Use of hindsight in determining a lease term;
• Reliance on previous assessments on whether leases are onerous.
A reconciliation of operating lease commitments at 30 September 2019 to the lease liability recognised at 1 October 2019 is shown below.
2020
NZ$000
Operating lease commitments at 30 September 29,395
The effect of discounting (5,062)
Adjustments related to options and lease term (6,713)
Lease liabilities at 1 October 2019 17,620
Less than one year 2,530
One to five years 6,568
More than five years 8,522
Lease liabilities at 1 October 2019 17,620
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS/16
PRACTICAL EXPEDIENTS APPLIED (CONTINUED)
A reconciliation of the adjustment to retained earnings at 1 October 2019 in applying NZ IFRS 16 is shown below.
2020
NZ$000
Lease incentives 3,739
Prepaid lease payments (388)
Lease asset 12,671
Lease liability (17,620)
Foreign currency differences 149
Deferred tax (384)
Adjustment to retained earnings from applying NZ IFRS 16 (1,833)
2.6 IMPACT OF STANDARDS ISSUED BUT NOT YET ADOPTED
The International Accounting Standards Board has issued IFRS 17 Insurance Contracts, as well as amendments to existing international
accounting standards. IFRS 17 is mandatory for reporting periods on, or after 1 January 2021. Gentrack Group does not intend to adopt
this standard before its mandatory date.
Gentrack Group financial reporting will be presented in accordance with these new and amended standards when they become
mandatory, however none are expected to have a material impact on Gentrack Group’s consolidated results.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS/17
3.GROUP PERFORMANCE
This section outlines further details of Gentrack Group’s financial performance by building on the information presented in the
statement of comprehensive income.
3.1 OPERATING SEGMENTS
An operating segment is a component of an entity that engages in business activities from which it may earn revenue and incur expenses,
whose operating results are regularly reviewed by the entity’s Chief Operating Decision Maker to make decisions about resources to be
allocated to the segment and assess its performance, and for which discrete financial information is available. Operating segments are
aggregated for disclosure purposes where they have similar products and services, production processes, customers, distribution methods
and regulatory environments.
Gentrack Group currently operates in two business segments, utility billing software and airport management software, as at
30 September 2020. These segments have been determined based on the reports reviewed by the Board (Chief Operating
Decision Maker) to make strategic decisions.
The assets and liabilities of Gentrack Group are reported to and reviewed by the Chief Operating Decision Maker in total and are not
allocated by business segment. Therefore, operating segment assets and liabilities are not disclosed.
2020
UTILITY
NZ$000
AIRPORT
NZ$000
TOTAL
NZ$000
TIMING OF REVENUE RECOGNITION
Point in time 7,379 2,018 9,397
Over time 74,397 16,739 91,136
Total revenue 81,776 18,757 100,533
Expenditure (71,565) (16,875) (88,440)
Segment contribution (1) 10,211 1,882 12,093
2019
UTILITY
NZ$000
AIRPORT
NZ$000
TOTAL
NZ$000
TIMING OF REVENUE RECOGNITION
Point in time 6,326 5,440 11,766
Over time 81,853 18,063 99,916
Total revenue 88,179 23,503 111,682
Expenditure (68,174) (18,695) (86,869)
Segment contribution (1) 20,005 4,808 24,813
A reconciliation of segment contribution to loss attributable to the shareholders of the company is provided below:
2020
NZ$000
2019
NZ$000
Segment contribution (1) 12,093 24,813
Depreciation and amortisation (12,354) (9,440)
Revaluation of acquisition related financial liabilities
891 384
Impairment of goodwill and intangible assets
(34,511) (14,551)
Net finance expense
(386) (763)
Income tax benefit/(expense)
2,561 (3,758)
Loss attributable to the shareholders of the company
(31,706) (3,315)
(1) Segment contribution is defined as profit before depreciation, amortisation, acquisition related costs, revaluation of financial liabilities, impairment of goodwill and intangible assets, financing and tax
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS/18
3.1 OPERATING SEGMENTS (CONTINUED)
2020
NZ$000
2019
NZ$000
REVENUE BY DOMICILE OF ENTITY
Australia 22,659 22,724
New Zealand
16,447 18,142
United Kingdom
55,458 60,469
Rest of World
5,969 10,347
Total revenue
100,533 111,682
REVENUE BY DOMICILE OF CUSTOMER
Australia 25,755 24,947
New Zealand
8,456 12,244
United Kingdom
52,746 58,913
Rest of World
13,576 15,578
Total revenue
100,533 111,682
In 2020 and 2019, no single customer including their subsidiaries accounted for 10% or more of Gentrack Group’s revenue.
3.2 OPERATING REVENUE
Gentrack Group recognises revenue from customers when the performance obligation has been accomplished. A performance
obligation is accomplished when the customer has received all of the benefits promised under the performance obligation. The
following sections detail the type of revenue recognised within each category. Effective from 1 October 2018 Gentrack Group
adopted NZ IFRS 15 Revenue from Contracts with Customers, this did not result in significant changes in accounting policies related to
revenue recognition. Refer to the 2019 Annual Report for details on the method and timing of revenue recognition.
Revenue recognition involves certain revenue streams being recognised based on the stage of completion. This process uses
estimations of time required to complete the project and is based on detailed information on hours worked to date, prior
experience and project scheduling tools. Gentrack Group employs project managers to provide regular information to
management on the progress of all projects. All estimates are reviewed by management prior to revenue recognition.
ANNUAL FEES
Annual fees include software support and maintenance charged on software licenses, software subscriptions and managed services.
Revenue from annual fees is generally recognised over the period as the benefits are consumed by the customer.
SUPPORT SERVICES
Support services are post implementation value-add professional services related to ongoing upgrades, minor software revisions and
extended support. Support services revenue is recognised when the service is complete or on a stage of completion basis.
LICENSES
Revenue from license fees is recognised when the customer is able to benefit from the licensed software. License fees that are highly
interrelated with project services are recognised based on a stage of completion of the project.
PROJECT SERVICES
Revenue from project services is recognised based on the stage of completion of the project. This is typically in accordance with the
achievement of contract milestones and/or hours expended and forecast hours to complete the project.
OTHER
Other revenue is primarily revenue from hardware and the recharge of ad-hoc costs that are recharged to customers. Revenue from
hardware sales is recognised when the hardware has been delivered to the customer.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS/19
3.2 OPERATING REVENUE (CONTINUED)
SECTION
2020
NZ$000
2019
NZ$000
OPERATING REVENUE:
Annual fees 60,394 54,904
Support services
20,636 23,335
Project services
13,286 21,377
Licenses
2,177 5,708
Other
2,070 5,006
Total operating revenue
98,563 110,330
OTHER INCOME:
Government grants 3.3 1,970 1,352
Total revenue
100,533 111,682
3.3 OTHER INCOME
GOVERNMENT GRANTS
Government grants are recognised at their fair value where there is a reasonable assurance that the grant will be received, and
Gentrack Group will comply with all attached conditions. When a grant relates to an expense item, it is recognised as income
over the period necessary to match the grant on a systematic basis to the costs that it is intended to compensate.
During 2020, Gentrack Group recognised a total of $2.0m (2019: $1.0m) of grants from Callaghan Innovation in New Zealand and
Research and Development Expenditure Credits (RDEC) from the UK Government. T hese government grants provide a percentage return
for eligible Research and Development conducted by Gentrack Group. At balance date, the Callaghan grant has a 10% retention o f
$0.1m which is yet to be paid and is subject to an independent auditor review. The RDEC grant is a tax incentive and at balance date
$0.6m was outstanding, the benefit will be applied to Gentrack Group’s tax payable when the income tax return for 30 September 2020
is filed.
3.4 EXPENDITURE
The table below provides a detailed breakdown of the total expenditure presented in the statement of comprehensive income.
2020
NZ$000
2019
NZ$000
PROFIT/(LOSS) BEFORE TAX INCLUDES THE FOLLOWING SPECIFIC EXPENSES
Employee entitlements 65,780 58,914
Administrative costs
6,721 11,691
Third party customer-related costs
6,450 6,967
Advertising and marketing
898 1,565
Consulting and subcontracting
5,754 5,346
Other operating expenses
2,837 2,386
Total expenditure
88,440 86,869
Included in the total expenditure shown above, Gentrack Group has expensed $15.7m of research and development expenditure in 2020
(2019: $8.4m) related to software research and development in the statement of comprehensive income. This r esearch and development
expenditure includes payroll overheads, employee benefits and other employee-related expenses.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS/20
3.5 DEPRECIATION AND AMORTISATION
Depreciation on assets is calculated using the straight-line method to allocate the difference between their original costs and
their residual values over their estimated useful lives.
Except for goodwill and brands, intangible assets are amortised on a straight-line basis in the statement of comprehensive income over
their estimated useful lives, from the date that they are available for use.
2020
NZ$000
2019
NZ$000
Depreciation 3,289 1,001
Amortisation 9,065 8,439
Total depreciation and amortisation
12,354 9,440
3.6 NET FINANCE EXPENSE
Finance income comprises interest income and foreign currency gains that are recognised in the statement of comprehensive
income. Interest income is recognised as it accrues, using the effective interest method.
Finance expense comprises interest expense on borrowings, lease liability finance charges, foreign currency losses and impairment losses
recognised on the financial assets (except for trade receivables) that are recognised in the statement of comprehensive income. All
borrowing costs are recognised in the statement of comprehensive income using the effective interest method.
SECTION
2020
NZ$000
2019
NZ$000
FINANCE INCOME
Interest income 7 11
7 11
FINANCE EXPENSE
Interest expense (383) (690)
Lease liability finance charges 9.1
(931) -
Interest paid - NPV discount
(7) (54)
Foreign exchange losses
928 (30)
(393) (774)
Net finance expense (386) (763)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS/21
4.CASH, BORROWINGS AND CASH FLOWS
This section outlines further from the statement of cashflows and provides details on the cash and cash equivalents held in the
statement of financial position.
Cash comprises cash at bank and on hand.
4.1 RECONCILIATION OF NET SURPLUS TO CASH FLOWS
SECTION
2020
NZ$000
2019
NZ$000
RECONCILIATION OF OPERATING CASH FLOWS WITH
NET PROFIT AFTER TAX
Loss after tax (31,706) (3,315)
ADJUSTMENTS FOR NON-CASH ITEMS
Deferred tax 7.2 (4,237) (2,386)
Impairment provision - Trade receivables
1,939 1,866
Loss on foreign exchange transactions
(928) 28
Share based payments 6.2
310 80
Net interest expense 3.6
375 679
Revaluation and interest on financial liability
(884) (330)
Other non-cash items
(3) 6
Depreciation and amortisation 3.5
12,354 9,440
Impairment of goodwill and other intangibles 5.2,5.3,5.4
34,511 14,551
Non-cash items
11,731 20,619
ADD/(DEDUCT) MOVEMENTS IN OTHER WORKING CAPITAL ITEMS
(Increase)/Decrease in trade and other receivables 10,850 (9,717)
(Decrease)/Increase in tax payable
(2,611) (1,995)
Increase/(Decrease) in GST payable
1,215 728
Increase/(Decrease) in contract liabilities
196 4,409
Increase/(Decrease) in employee entitlements
965 825
(Decrease)/Increase in trade payables and accruals
(380) (2,078)
Net working capital movements
10,235 (7,828)
Net cash inflow from operating activities 21,966 12,791
4.2 BANK FACILITIES AND BORROWINGS
Gentrack Group has a NZ$20m multi-currency facility with ASB Bank Limited to provide additional funding as required for acquisitions and
general corporate purposes. This facility expires on 28 March 2022 and at 30 September 2020, $2.5m was drawn down (2019: $4.0m).
The facility is secured by a general security agreement under which ASB has a security interest in Gentrack Group assets. Covenants are in
place and compliance is reported quarterly. At all times during the year Gentrack Group has met the covenant requirements.
Interest is payable at a rate calculated as a base rate plus a pre-determined margin. During the year, the average rates for the NZD
denominated borrowings were 1.83%.
During the year the Related party borrowings from Shireburn Company Limited, the minority shareholder of CA Plus was repaid in full.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS/22
4.3 CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash in hand, deposits held at call with banks, other short-term and highly liquid
investments with original maturities of three months or less.
2020
NZ$000
2019
NZ$000
Bank balances 19,320 8,625
Cash on hand 1 1
Total cash and cash equivalents
19,321 8,626
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS/23
5.ASSETS AND LIABILITIES
This section outlines further details of Gentrack Group’s financial position by building on information presented in the statement
of financial position
.
5.1 TRADE AND OTHER RECEIVABLES
Gentrack Group recognises trade and other receivables initially at fair value and subsequently measured at amortised cost
using the effective interest method, less provision for impairment. An impairment provision for trade receivables consists of the
expected credit loss in accordance with NZ IFRS 9 and a specific provision.
A specific provision is established when there is objective evidence that Gentrack Group will not be able to collect all amounts
due according to the original terms of the receivables. The carrying amount of an asset is reduced through the use of provision
accounts, and the amount of the loss is recognised in the statement of comprehensive income. When a receivable is
uncollectible, it is written off against the specific impairment provision account. Subsequent recoveries of amounts previously written off
are credited against the statement of comprehensive income.
2020
NZ$000
2019
NZ$000
Trade receivables 15,084 22,254
Impairment provision – Expected credit loss (390) (460)
Impairment provision – Specific provision
(3,460) (2,408)
Provision for credits
(131) (150)
Contract assets
5,683 9,593
Sundry receivables and prepayments
2,165 2,450
Total trade and other receivables
18,951 31,279
MOVEMENT IN TRADE RECEIVABLES IMPAIRMENT PROVISION
2020
NZ$000
2019
NZ$000
Opening balance 2,868 504
Increase in impairment provision 2,618 2,794
Write back in impairment provision
(566) (177)
Effect of movement in foreign exchange
13 (210)
Bad debt written off
(1,083) (43)
Total trade receivables impairment provision
3,850 2,868
During the year a specific provision of $0.2m was raised related to the Airports business. This provision was raised as a result of the
pressure that COVID-19 has had on our Airport customers.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS/24
5.1 TRADE AND OTHER RECEIVABLES (CONTINUED)
The expected credit loss provision for trade receivables has been measured using the same techniques as the prior year, determined as
follows.
2020
CURRENT
NZ$000
1-60 DAYS
PAST DUE
NZ$000
61-120
DAYS PAST
DUE
NZ$000
121-180
DAYS PAST
DUE
NZ$000
OVER 180
DAYS PAST
DUE
NZ$000
TOTAL
NZ$000
Gross carrying amount 8,513 3,214 356 806 2,195 15,084
Baseline 21 21 5 20 106 173
Aging and Customer duration 1 6 3 39 112 161
Country, Customer and Market 16 8 2 6 24 56
Total expected credit loss rate 0.45% 1.09% 2.84% 8.08% 11.03% 2.59%
Expected credit loss allowance 38 35 10 65 242 390
2019
CURRENT
NZ$000
1-60 DAYS
PAST DUE
NZ$000
61-120
DAYS PAST
DUE
NZ$000
121-180
DAYS PAST
DUE
NZ$000
OVER 180
DAYS PAST
DUE
NZ$000
TOTAL
NZ$000
Gross carrying amount 12,848 3,248 2,842 746 2,570 22,254
Baseline 39 23 7 11 123 202
Aging and Customer duration 9 14 7 13 138 181
Country, Customer and Market 37 7 2 3 27 76
Total expected credit loss rate 0.67% 1.37% 0.57% 3.57% 11.17% 2.07%
Expected credit loss allowance 85 45 16 27 287 460
5.2 GOODWILL
Goodwill represents the difference between the cost of acquisition and the fair value of the net identifiable assets acquired.
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units (CGU) and is
not amortised but is tested annually for impairment
.
2020
NZ$000
2019
NZ$000
Opening balance 134,434 146,189
Goodwill impairment (28,040) (10,380)
Exchange rate differences
205 (1,375)
Closing net book value
106,599 134,434
Goodwill allocated to Utilities 103,699 106,758
Goodwill allocated to Airport 20/20
2,900 2,900
Goodwill allocated to Blip Systems
- 8,292
Goodwill allocated to Evolve Analytics
- 16,484
Net book value
106,599 134,434
During the year due to the further alignment of t he Utilities and Evolve Analytics CGU’s, the Evolve Analytics CGU has been combined
within the Utilities CGU. With the increased alignment it is now no longer possible to meaningfully separate the cashflows and therefore
they are now reported as a single CGU.
During the year goodwill was impaired for Utilities ($19.3m) and Blip Systems ($8.7m), refer to section 5.3 for further details.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS/25
5.3 IMPAIRMENT TESTING
IMPAIRMENT OF GOODWILL AND OTHER ASSETS
At each reporting date, Gentrack Group assesses whether there is any indication that an asset may be impaired. Where an
indicator of impairment exists, Gentrack Group makes a formal estimate of the recoverable amount. Where the carrying value
of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
Recoverable amount is the greater of fair value less costs to sell or the asset’s value in use. For the purposes of assessing impairment,
assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets
other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects
the current market assessments and the time value of money and the risks specific to the asset. Value in use is determined by discounting
the future cash flows generated by each CGU. Cash flows were projected based on five-year business plans. The Weighted Average Cost of
Capital (WACC) is based on CAPM methodology using market specific inputs. The WACC for each CGU is reviewed at least annually. The
key assumptions are detailed in the table below.
Gentrack Group tests annually whether goodwill has suffered any impairment or more often as required, in accordance with the
accounting policy stated above. The recoverable amounts of cash-generating units have been determined based on value in use
calculations. Preparing five-year forecasts in a COVID-19 environment has been a challenging task due to the uncertainty of the
future. In preparing the five-year forecasts, management has reviewed the assumptions and weighed up the information available at the
time to ensure the forecasts are appropriate given the CGU’s position and the prevailing market conditions.
These calculations require the use of assumptions, the details of these assumptions and the potential impact of changes to the
assumptions are presented below.
CASH GENERATING UNIT
2020 REVENUE
GROWTH
2021 - 2025
WACC
2020
2019 REVENUE
GROWTH
2020 - 2024
WACC
2019
Utilities 4% CAGR 9.8% 8% CAGR 8.7%
Airport 20/20 5% CAGR 10.1% 10% CAGR 8.8%
The terminal revenue growth rate for all CGU’s is calculated based on the 2025 year and assumes a continuous growth of a minimum of
projected inflation estimates of 1.75% (2019: 1.25%). These values assigned to the key assumptions represent management’s assessments
of future trends and are based on both external and internal sources.
IMPAIRMENT TESTING RESULTS
Airport 20/20
The calculations confirmed there was no impairment of goodwill during the year for the Airport 20/20 CGU’s. Management believes that
any reasonable possible change in the key assumptions for Airport 20/20 would not cause the carrying amount to exceed the recoverable
amount.
Utilities
In the Utilities CGU impairment test the carrying value exceeded the value in use by $19.3m, as such the Utilities CGU goodwill has been
impaired by $19.3m and the carrying value following impairment is $137.8m. The Utilities CGU is being impaired because the expected
revenue growth has not been delivered. The reduction in revenue growth is a result of a number of factors including; unpredictable
market conditions (Brexit and COVID-19) and emergence of stronger competition with new market offerings in the UK energy market.
The business plan is under review by Gentrack Group’s new CEO (Gary Miles) who joined Gentrack Group on 1 October 2020.
The carrying value, after the impairment of, $137.8m (value in use) remains sensitive to the future performance of the CGU. Management
considers that based on the current customer revenue profile, sales opportunity pipeline and quality of prospects it is not appropriate to
recognise any further impairment at this stage. However, if the expected future performance does not eventuate, there may be need for
further impairment. Sensitivities are summarised below.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS/26
IMPAIRMENT TESTING RESULTS (CONTINUED)
Utilities (Continued)
Changes in key assumptions were considered as sensitivities. These are summarised in the table below.
CASH GENERATING UNIT
RECOVERABLE
AMOUNT
EBITDA
+5%
EBITDA
-5%
WACC
+1%
WACC
-1%
Utilities 137,848 7,192 (7,192) (17,163) 22,129
Airport 20/20 4,857 463 (463) (813) 1,046
Following the $19.3m impairment the Utilities CGU remains sensitive to WACC discount rate, EBITDA and terminal growth rate.
Blip Systems – Full impairment
Blip Systems was acquired by Gentrack Group in April 2017, as an innovative supplier of passenger tracking solutions principally for
airports. During the 6 months to 31 March 2020, expected sales growth was not delivered. Further, Blip Systems is impacted by COVID-19
with uncertainty over when the business will return to business as usual.
In view of the recent performance and the uncertainties around future performance of Blip Systems in a COVID-19 environment,
management considered a full impairment of the $10.7m carrying value of these acquired assets was appropriate to recognise at 31 March
2020. The $10.7m impairment includes $8.7m in goodwill and $2.0m of intangible assets.
Details of the impairment related amounts are included in section 5.2 and section 5.4.
Gentrack Group will continue to leverage the Blip Systems intellectual property and it remains an important part of the overall Veovo
product offering. At present there is a pipeline of potential opportunities as airports globally look to technology to address crowd
management and social distancing requirements essential to the COVID-19 recovery
.
5.4 INTANGIBLE ASSETS
CAPITALISED DEVELOPMENT
Costs that are directly associated with the development of software are recognised as intangible assets where the following
criteria are met:
•it is technically feasible to complete the software product so that it will be available for use;
•management intends to complete the software product and use or sell it;
•there is an ability to use or sell the software product;
•it can be demonstrated how the software product will generate probable future economic benefits;
•adequate technical, financial and other resources to complete the development and to use or sell the software product are available;
and
•the expenditure attributable to the software product during its development can be reliably measured.
Software development costs that meet the above criteria are capitalised. Other development expenditure that does not meet the above criteria
is recognised as an expense as incurred. Development costs previously recognised as expenses are not recognised as assets in a subsequent
period. Software development costs recognised as assets are amortised over their estimated useful lives.
BRANDS
Brands are considered to have an indefinite useful life and are held at cost and are not amortised but are subject to an annual impairment test
consistent with the methodology outlined for goodwill above.
OTHER INTANGIBLE ASSETS
Other intangible assets consist of internal use software, acquired source code, trade-marks and customer relationships. They have finite useful
lives and are measured at cost less accumulated amortisation and accumulated impairment losses.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS/27
5.4 INTANGIBLE ASSETS (CONTINUED)
AMORTISATION
Except for goodwill and brands, intangible assets are amortised on a straight-line basis in the statement of comprehensive
income over their estimated useful lives, from the date that they are available for use.
The estimated useful lives for the current and comparative periods are as follows:
•Acquired source code10 years
•Customer relationships10 years
•Trademarks 4 years
•Capitalised development5 years
Amortisation methods, useful lives and residual values are reviewed at each financial year end and adjusted if appropriate.
2020
SOFTWARE
NZ$000
CUSTOMER
RELATIONSHIPS
NZ$000
BRAND
NAMES
NZ$000
TRADEMARKS
NZ$000
CAPITALISED
DEVELOPMENT
NZ$000
TOTAL
NZ$000
Opening balance 31,413 15,718 5,024 621 7,706 60,482
Additions - - - - 331 331
Amortisation (4,861) (2,473) - (169) (1,562) (9,065)
Impairment (1,616) (390) - - (4,464) (6,470)
Movement in foreign exchange 110 33 - 2 5 150
Closing net book value 25,046 12,888 5,024 454 2,016 45,428
Cost 44,945 24,129 5,024 839 2,726 77,663
Accumulated amortisation (19,899) (11,240) - (385) (710) (32,235)
Net book value 25,046 12,888 5,024 454 2,016 45,428
2
019
SOFTWARE
NZ$000
CUSTOMER
RELATIONSHIPS
NZ$000
BRAND
NAMES
NZ$000
TRADEMARKS
NZ$000
CAPITALISED
DEVELOPMENT
NZ$000
TOTAL
NZ$000
Opening balance 39,126 19,002 5,024 793 4,242 68,187
Additions 526 - - - 5,128 5,654
Amortisation (4,890) (2,471) - (163) (915) (8,439)
Impairment (2,837) (617) - - (717) (4,171)
Movement in foreign exchange (512) (196) - (9) (32) (749)
Closing net book value 31,413 15,718 5,024 621 7,706 60,482
Cost 47,170 24,676 5,024 840 8,810 86,520
Accumulated amortisation (15,757) (8,958) - (219) (1,104) (26,038)
Net book value 31,413 15,718 5,024 621 7,706 60,482
During the year capitalised development products have been impaired by $4.5m. These impairments related to the following products:
•GBERS (Great Britain Energy Retail System) $1.5m
•SGERS (Singapore Energy Retail System) $0.8m
•NZERS (New Zealand Energy Retail System) $0.1m
•AUWRS (Australia Water Retail System) $2.0m
These impairments have been made because of product rationalisation and delays in capturing additional customers and market share to
support the full carrying value of the products. Apart from GBERS, all the products listed above continue to be used by active customers
and there are either known future opportunities or the potential to market these products to customers in the future.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS/28
5.5 PROPERTY, PLANT AND EQUIPMENT
In the statement of financial position property, plant and equipment is stated at historical cost less depreciation. Historical cost
includes expenditure that is directly attributable to the acquisition of the items.
Depreciation on assets is calculated using the straight-line method to allocate the difference between their original costs and their residual
values over their estimated useful lives, as follows:
•Office equipment, fixtures and fittings 7 years
•Computer equipment 3 to 7 years
•Leasehold improvementsTerm of lease
The assets’ residual values and useful lives are reviewed and adjusted if appropriate at each balance date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its
estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amounts and are recognised in the statement of
comprehensive income.
2020
FURNITURE &
EQUIPMENT
NZ$000
COMPUTER
EQUIPMENT
NZ$000
LEASEHOLD
IMPROVEMENTS
NZ$000
TOTAL
NZ$000
Opening balance 969 849 1,635 3,453
Additions 22 300 2 324
Depreciation (197) (556) (185) (938)
Disposals - (16) - (16)
Movement in foreign exchange (6) (55) 1 (60)
Net book value 788 522 1,453 2,763
Cost 2,097 3,918 2,087 8,103
Accumulated depreciation (1,309) (3,396) (635) (5,340)
Net book value 788 522 1,453 2,763
2019
FURNITURE &
EQUIPMENT
NZ$000
COMPUTER
EQUIPMENT
NZ$000
LEASEHOLD
IMPROVEMENTS
NZ$000
TOTAL
NZ$000
Opening balance 1,122 930 1,784 3,836
Additions 66 547 44 657
Depreciation (209) (608) (184) (1,001)
Disposals (2) (21) - (23)
Movement in foreign exchange (8) 1 (9) (16)
Net book value 969 849 1,635 3,453
Cost 2,133 3,783 2,086 8,002
Accumulated depreciation (1,164) (2,934) (451) (4,549)
Net book value 969 849 1,635 3,453
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS/29
5.6 TRADE PAYABLES AND ACCRUALS
Gentrack Group recognises trade and other payables initially at fair value and subsequently measured at amortised cost using
the effective interest method. They represent liabilities for goods and services provided prior to the end of the financial year
that are unpaid. The amounts are unsecured, non-interest bearing and are usually paid within 45 days of recognition.
2020
NZ$000
2019
NZ$000
Trade creditors 1,803 3,742
Sundry accruals 2,102 1,745
Total trade payables and accruals
3,905 5,487
5.7 EMPLOYEE ENTITLEMENTS
Liabilities for salaries and wages, including non-monetary benefits, long service leave and annual leave are recognised in
employee benefits in respect of employees’ services up to the reporting date. They are measured at the amounts expected to
be paid when the liabilities are settled. Cost for non-accumulating sick leave is recognised when the leave is taken and
measured at the rates paid or payable.
2020
NZ$000
2019
NZ$000
CURRENT
Long service leave 611 635
Other short-term employee benefits
4,941 3,953
5,552 4,588
NON-CURRENT
Long service leave 428 411
Total employee entitlements
5,980 4,999
5.8 FINANCIAL LIABILITIES
The potential cash payments related to put options issued by Gentrack Group for the equity of acquired companies is accounted
for as a financial liability. The amount that may become payable under the option on exercise is initially recognised at fair value.
Options are subsequently reassessed to fair value, using the effective interest rate method, and any change arising is reflected
as an adjustment to the financial liability and a corresponding entry is recognised in the statement of comprehensive income.
2020
NZ$000
2019
NZ$000
CURRENT
Put/Call option – Blip Systems - 2,451
NON-CURRENT
Put/Call option – Blip Systems - -
Total financial liabilities
- 2,451
In December 2019 Gentrack Group settled the call/put option related to the acquisition of Blip Systems with a payment of $2.5m. For
more information on the Blip Systems acquisition and the option please refer to the 2018 Annual Report.
In May 2020, deferred consideration of €1 was paid in relation to acquiring the final 25% in CA Plus Limited. The acquisition of CA Plus
Limited included $0.9m of trade payables which could be written off if the deferred consideration fell below a certain level. These trade
payables were written off during the year resulting in a $0.9m credit in the statement of comprehensive income.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS/30
5.9 INVENTORY
Inventories are stated at the lower of cost and net realisable value. Cost is calculated using a weighted average method and
includes expenditure incurred to purchase the inventory and transport it to its current location. Net realisable value is the
estimated selling price of the inventory in the ordinary course of business less costs necessary to make the sale. The cost of
inventories consumed during the year are recognised as an expense and included in expenditure in the statement of comprehensive
income.
5.10 PROVISIONS
Gentrack Group recognises a provision when it has a present legal or constructive obligation as a result of past events, it is
probable that an outflow of resources will be required to settle the obligation, and the amount has been reliably estimated.
Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering
the class of obligations as a whole.
Provisions are measured at the present value of the expenditure expected to be required to settle the obligation using a pre-tax rate that
reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due
to the passage of time is recognised as a finance expense in the statement of comprehensive income.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS/31
6.CAPITAL STRUCTURE
This section outlines Gentrack Group’s capital structure and details of share-based employee incentives which have an
impact on Gentrack Group’s equity.
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options
are recognised as a deduction from equity, net of any tax effects. Where any Gentrack Group company purchases the
Company’s equity share capital (treasury shares), the consideration paid is deducted from equity attributable to the Company’s
equity holders until the shares are cancelled or transferred outside Gentrack Group.
Ordinary shares are fully paid and have no par value. The holders of ordinary shares are entitled to receive dividends as declared from
time to time and are entitled to one vote per share at meetings of the Company and rank equally with regard to the Company’s residual
assets.
6.1 CAPITAL MANAGEMENT
The capital structure of Gentrack Group consists of equity raised by the issue of ordinary shares in the parent company.
Gentrack Group manages its capital to ensure that companies in the Group are able to continue as going concerns. Gentrack Group is not
subject to any externally imposed capital requirements.
SHARES ISSUED SHARE CAPITAL
2020
000
2019
000
2020
NZ$000
2019
NZ$000
Ordinary Shares 98,645 98,525 191,229 190,968
Issue of new ordinary shares - 120 - 261
98,645 98,645 191,229 191,229
6.2 SHARE-BASED PAYMENTS
Gentrack Group operates equity settled, share-based payments schemes under which it receives services from employees, as
consideration for equity instruments of Gentrack Group. A valuation has been completed for each scheme at the grant date to
estimate the fair value of the performance rights allocated. Management also make estimates about the number of performance
rights that are expected to vest which determines the expense recorded in the statement of comprehensive income.
EQUITY SETTLED LONG TERM INCENTIVE SCHEME – EARNINGS PER SHARE CUMULATIVE AVERAGE GROWTH
RATE (EPS CAGR)
During the year the Gentrack Group Board approved the fifth annual issue and two one-off issues of the equity settled long term incentive
scheme first implemented in 2016 for selected key personnel. The scheme is intended to attract and reward key personnel to focus on
long-term performance. The number of performance rights are allocated based on a percentage of salary or other such percentage and
are calculated with reference to the 10-trading day volume weighted average price (VWAP) of shares traded on the NZX based on dates
indicated in the issue documentation.
The two one-off issues during the year under this scheme include tenure only components which will vest based on the timelines included
in the issue documentation.
The fair value of the performance rights is determined at the grant date using the Black Scholes valuation method. The fair
value of the performance rights is recorded as an expense in the statement of comprehensive income over the vesting period,
based on Gentrack Group’s estimate of the number of performance rights that will vest, with a corresponding entry to the
share-based payment reserve within equity. During the year ended 30 September 2020, $0.3m has been recognised in the statement of
comprehensive income for that period (2019: $0.1m).
The number of performance rights subject to the EPS hurdle that will vest and be exercisable after three years depends on achievement of
the EPS performance hurdle. The performance hurdle is that 50% of the EPS Performance Rights will vest if EPS CAGR of Gentrack Group
over the three financial years is 7%, with the number of performance rights that vest increasin g on a linear basis to 100% if EPS CAGR of
12% is achieved.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS/32
6.2 SHARE-BASED PAYMENTS (CONTINUED)
Details of the outstanding performance rights are detailed below:
2020
EXPIRY DATE
TOTAL VALUE OF
GRANTED
PERFORMANCE
RIGHTS
NZ$000
PERFORMANCE
RIGHTS GRANTED
000
EPS SCHEMES 2017-2020
1 October 2017 30 November 2020 318 55
1 October 2018 30 November 2021 411 86
1 October 2019 30 November 2022 1,055 217
1 April 2020 1 April 2023 1,364 1,026
1 August 2020 1 August 2021 28 24
Total EPS Schemes 3,176 1,408
GRANT DATE
2019
EXPIRY DATE
TOTAL VALUE OF
GRANTED
PERFORMANCE
RIGHTS
NZ$000
PERFORMANCE
RIGHTS GRANTED
000
EPS SCHEMES 2016-2018
1 October 2016 30 November 2019 214 76
1 October 2017 30 November 2020 449 78
1 October 2018 30 November 2021 542 114
Total EPS Schemes
1,205 268
Below is a summary of the performance rights, granted, exercised and forfeited during 2020 for the EPS schemes:
2020 2019
GRANT DATE
AVERAGE EXERCISE
PRICE PER
PERFORMANCE RIGHT
NUMBER OF
PERFORMANCE
RIGHTS
000
AVERAGE EXERCISE
PRICE PER
PERFORMANCE
RIGHT
NUMBER OF
PERFORMANCE
RIGHTS
000
As at 1 October $4.49 268 $3.25 306
Granted during the year $1.93 1,267 $4.75 114
Exercised during the year
- - $2.18 (120)
Forfeited during the year
$3.78 (127) $2.18 (32)
As at 30 September
$2.25 1,408 $4.49 268
GRANT DATE
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS/33
6.3 DIVIDENDS
Details of the dividends paid during the year ended 30 September 2020 are provided below:
CENTS PER SHARE DIVIDENDS PAID
2020
2019
2020
NZ$000
2019
NZ$000
Final dividend paid 3.0c 8.7c 3,004 8,572
Interim dividend paid - 5.0c - 4,891
3.0c 13.5c 3,004 13,463
6.4 EARNINGS PER SHARE
Gentrack Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by
dividing the net profit attributable to ordinary shareholders of the Company by the weighted average number of ordinary
shares on issue during the year, excluding shares purchased and held as treasury shares.
Diluted EPS is determined by adjusting the net profit attributable to ordinary shareholders and the weighted average number of ordinary
shares on issue for the effects of the dilutive impact of potential ordinary shares, which comprise performance share rights granted to
employees.
Potential ordinary shares are treated as dilutive when, and only when, their conversion to ordinary shares would decrease EPS or increase
the profit per share.
2020 2019
(Loss)/Profit attributable to the shareholders of the company (31,706) (3,315)
(Loss)/Profit attributable to the shareholders of the company adjusted for the effect
of dilution
(31,706) (3,315)
Basic weighted average number of ordinary shares issued
98,645 98,605
Shares deemed to be issued for no consideration in respect of share-based
payments
1,408 267
Weighted average number of shares used in diluted earnings per share
100,053 98,872
Basic earnings per share
($0.32) ($0.03)
Diluted earnings per share
($0.32) ($0.03)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS/34
7.TAX
7.1 INCOME TAX EXPENSE
In the statement of comprehensive income, the income tax expense comprises current and deferred tax. Current tax is the
expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the reporting date,
and any adjustment to tax payable in respect of previous years. Current tax payable also includes any tax liability arising from
the declaration of dividends.
2020
NZ$000
2019
NZ$000
INCOME TAX EXPENSE COMPRISES:
Current tax expense 1,676 6,144
Deferred tax expense
(4,237) (2,386)
Tax (benefit)/expense
(2,561) 3,758
RECONCILIATION OF INCOME TAX EXPENSE
The relationship between the expected income tax expense based on the domestic effective tax rate of Gentrack Group at 28% (2019:
28%) and the reported tax expense in the statement of comprehensive income can be reconciled as follows:
2020
NZ$000
2019
NZ$000
(Loss)/Profit before tax (34,267) 443
Taxable income (34,267) 443
Domestic tax rate for Gentrack Group 28% 28%
Expected tax (benefit)/expense
(9,595) 124
Non-deductible expense 8,350 3,922
Foreign subsidiary company tax 1,009 (543)
Prior period adjustments
(2,325) 255
Actual tax (benefit)/expense
(2,561) 3,758
As at 30 September 2020 Gentrack Group has $8.7m (2019: $6.3m) of imputation credits available for use in subsequent
reporting periods.
7.2 DEFERRED TAX ASSETS AND LIABILITIES
Deferred tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and
their carrying amounts in the financial statements.
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the reporting date and
are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries, except for deferred income tax liabilities
where the timing of the reversal of the temporary difference is controlled by Gentrack Group and it is probable that the temporary
difference will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax
liabilities and when the deferred income tax assets and liabilities relate to income tax levied by the same taxation authority on either the
same taxable entity or different entities where there is an intention to settle the balance on a net basis.
Additional income tax expenses that arise from the distribution of cash dividends are recognised at the same time that the liability to pay
the related dividend is recognised. Gentrack Group does not distribute non-cash assets as dividends to its shareholders.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS/35
7.2 DEFERRED TAX ASSETS AND LIABILITIES (CONTINUED)
Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related
benefits will be realised.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which
temporary differences can be utilised. Management applies judgement when reviewing current business plans and forecasts to
ascertain the likelihood of future taxable profits.
The movement in temporary differences has been recognised in the statement of comprehensive income. Deferred tax has been
recognised at a rate at which they are expected to be realised: 28% for New Zealand entities, 30% for Australian entities, 17% for UK
entities, 22% for Denmark entities and 35% for Malta entities.
Movement in temporary timing differences during the year:
2020
OPENING
BALANCE
NZ$000
TEMPORARY
MOVEMENT
RECOGNISED
NZ$000
CURRENCY
TRANSLATION
NZ$000
CLOSING
BALANCE
NZ$000
Trade and other receivables (68) (15) (1) (84)
Intangible assets (7,196) 2,303 (20) (4,913)
Contract liabilities 661 202 8 871
Provisions 1,056 673 9 1,738
Losses carried forward 1,076 944 (4) 2,016
Other (97) 130 (9) 24
Net deferred tax (4,568) 4,237 (17) (348)
2
019
OPENING
BALANCE
NZ$000
TEMPORARY
MOVEMENT
RECOGNISED
NZ$000
CURRENCY
TRANSLATION
NZ$000
CLOSING
BALANCE
NZ$000
Trade and other receivables (197) 123 6 (68)
Intangible assets (10,308) 2,948 164 (7,196)
Contract liabilities 701 (28) (12) 661
Provisions 2,312 (1,216) (40) 1,056
Losses carried forward 613 511 (48) 1,076
Other (143) 48(2) (97)
Net deferred tax (7,022) 2,386 68 (4,568)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS/36
8.FINANCIAL RISK MANAGEMENT
Gentrack Group is exposed to credit risk, liquidity risk and market risks which include foreign currency risk, commodity price risk
and interest risk. This section details of each of these financial risks and how they are managed by Gentrack Group.
The Board of Directors has overall responsibility for the establishment and oversight of G
entrack Group’s risk management
framework. Gentrack Group’s risk management policies are established to identify and analyse (amongst other risks) the
financial risks faced by Gentrack Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits.
Risk management policies and systems are reviewed regularly to reflect changes in market conditions and Gentrack Group’s activities.
8.1 CREDIT RISK
Credit risk is the risk of financial loss to Gentrack Group if a customer or counter party to a financial instrument fails to meet its contractual
obligations, and it arises principally from Gentrack Group’s trade receivables from customers in the normal course of business.
Gentrack Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The credit
worthiness of a customer or counter party is determined by a number of qualitative and quantitative factors. Qualitative factors
include external credit ratings (where available), payment history and strategic importance of customer or counter party.
Quantitative factors include transaction size, net assets of customer or counter party, and ratio analysis on liquidity, cash flow and
profitability.
In relation to trade receivables, it is Gentrack Group’s policy that all customers who wish to trade on terms are subject to credit
verification on an ongoing basis with the intention of minimising bad debts. The nature of Gentrack Group’s trade receivables is
represented by regular turnover of product and billing of customers based on the contractual payment terms.
Gentrack Group has an impairment provision that represents its estimate of future incurred losses in respect of trade and other
receivables. The impairment provision consists of the expected credit loss provision in accordance with NZ IFRS 9 and a specific doubtful
debt provision used where there is objective evidence that indicates a trade receivable is impaired.
The carrying amount of Gentrack Group’s financial assets represents the maximum credit exposure as summarised in the table below:
2020 2019
GROSS
NZ$000
IMPAIRMENT
PROVISION
NZ$000
GROSS
NZ$000
IMPAIRMENT
PROVISION
NZ$000
Current 8,513 (38) 12,848 (115)
Past due 1-60 days 3,214 (918) 3,248 (326)
Past due 61-120 days
356 (178) 2,842 (594)
Past due 121-180 days
806 (600) 746 (248)
Past due over 180 days
2,195 (2,116) 2,570 (1,585)
15,084 (3,850) 22,254 (2,868)
Gentrack Group’s trade receivables are not exposed to any significant credit exposure to any single counterparty or group of
counterparties having similar characteristics. Trade receivables consist of a number of customers in various geographical areas. Based on
historic information about customer default rates, management considers the credit quality of trade receivables that are not past due or
impaired to be good.
As at 30 September 2020 there are no significant concentrations of credit risk for financial assets designated as at amortised cost or at fair
value. The carrying amount reflects Gentrack Group’s maximum exposure to credit risk for these financial assets.
Judgement has been applied to the recovery of all trade receivables, with management confirming that all carrying amounts are deemed
to be recoverable and not impaired.
The credit risk for cash and cash equivalents is considered negligible, since the counterparties are highly reputable financial intuitions with
high quality external credit ratings.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS/37
8.2 MARKET RISK
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect Gentrack Group’s income
or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk
exposures within acceptable parameters, while optimising the return on risk.
FOREIGN CURRENCY RISK
Gentrack Group is exposed to currency risk on transactions that are denominated in a currency other than the functional currency of
Gentrack Group (NZD), primarily the following currencies Australian Dollar (AUD), Pound Sterling (GBP), EURO (EUR) and US Dollar (USD),
and Danish Kroner ( DKK).
Gentrack Group’s exposure to foreign currency risk at the reporting date was as follows (all amounts are denominated in New Zealand
Dollars):
2020
AUD
NZ$000
GBP
NZ$000
EUR
NZ$000
USD
NZ$000
DKK
NZ$000
Cash and cash equivalents 5,634 10,675 70 1,029 96
Trade and other receivables 4,790 8,874 1,056 1,369 1,521
Trade and other payables (218) (1,479) (507) (1,768) (103)
Bank loans - (2,536) - --
Net exposure 10,206 15,534 619 630 1,514
2019
Cash and cash equivalents 1,309 3,903 112 425 208
Trade and other receivables 4,834 14,469 2,271 5,829 2,950
Trade and other payables (397) (1,384) (1,874) (1,539) (402)
Financial liabilities - -- - (2,451)
Net exposure 5,746 16,988 509 4,715 305
The following table summarises the sensitivity of profit or loss and equity with regards to Gentrack Group’s financial assets and financial
liabilities affected by AUD/NZD exchange rate, the GBP/NZD exchange rate, the EUR/NZD exchange rate, the USD/NZD exchange rate and
the DKK/NZD exchange rate with all other aspects being equal. It assumes a +/-10% change in the NZD to the currency exchange rate for
the year ended 30 September 2020 (2019: 10%). These +/-10% sensitivities have been determined based on the average market volatility
in exchange rates in the preceding 12 months.
P
ROFIT/EQUITY
AUD
NZ$000
GBP
NZ$000
EUR
NZ$000
USD
NZ$000
DKK
NZ$000
2020
10% strengthening in NZD (928) (1,412) (56) (57) (138)
10% weakening in NZD 1,134 1,726 69 70 168
2019
10% strengthening in NZD (522) (1,544) (46) (429) (28)
10% weakening in NZD 638 1,888 57 524 34
Gentrack Group’s exposure to foreign exchange rates varies during the year depending on the volume of foreign currency transactions.
Even so, the analysis above is representative of Gentrack Group’s exposure to market risk.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS/38
8.3 LIQUIDITY RISK
Liquidity risk is the risk that Gentrack Group will not be able to meet its financial obligations as and when they become due and payable.
Gentrack Group’s approach to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet its
liabilities when they become due and payable, under both normal and stressed conditions, without incurring unacceptable losses or risking
damage to Gentrack Group’s reputation.
Gentrack Group has sufficient cash to meet its requirements in the foreseeable future.
The following table details Gentrack Group’s contractual maturities of financial liabilities, as at the reporting date:
ON
DEMAND
NZ$000
LESS THAN 3
MONTHS
NZ$000
3 TO 12
MONTHS
NZ$000
1 TO 5
YEARS
NZ$000
>5 YEARS
NZ$000
TOTAL
NZ$000
2020
Bank loan - - 2,536 - - 2,536
Related party loan - - - - - -
Trade payables - 1,803 - - - 1,803
Financial liabilities - -- - - -
- 1,803 2,536 - - 4,339
2019
Bank loan - 4,000 - - - 4,000
Related party loan -
- 450 - 450
Trade payables - 3,742 - - - 3,742
Financial liabilities - -2,451 - - 2,451
- 7,742 2,451 450 - 10,643
8.4 INTEREST RATE RISK
Gentrack Group’s interest rate risk primarily arises from short term bank borrowing, cash and advances from related parties. Borrowings
and deposits at variable interest rates expose Gentrack Group to cash flow interest rate risk. Borrowings and deposits at fixed rates expose
Gentrack Group to fair value interest rate risk.
The following tables detail the interest rate repricing profile and current interest rate of the interest-bearing financial assets and liabilities.
EFFECTIVE
INTEREST
RATE
NZ$000
FLOATING
NZ$000
FIXED UP TO
3 MONTHS
NZ$000
FIXED UP TO
6 MONTHS
NZ$000
FIXED UP TO
5 YEARS
NZ$000
TOTAL
NZ$000
ASSETS
Bank balances - 19,320 - - - 19,320
LIABILITIES
Bank loans 1.83% (2,536) - - - (2,536)
Total exposure 16,784 - - - 16,784
EFFECTIVE
INTEREST
RATE +1%
NZ$000
EFFECTIVE
INTEREST
RATE -1%
NZ$000
Bank balances 195 (195)
Bank loans (74) (21)
Total exposure 121 (216)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS/39
8.5 FINANCIAL INSTRUMENTS
Gentrack Group’s financial assets are measured at amortised cost. Gentrack Group’s financial assets are held within a business
model whose objective is to hold the financial asset in order to collect contractual cash flows and the financial asset gives rise
to contractual cash flows on specified dates that are payments of principal and interest on the principal outstanding.
Gentrack Group’s financial liabilities are measured at amortised cost except for contingent consideration which is required to be measured
at fair value through profit and loss.
Gentrack Group’s financial assets and liabilities by category are summarised as follows:
CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise of cash at bank and on hand and the carrying amount is equivalent to fair value.
TRADE RECEIVABLES
These assets are short term in nature and are reviewed for impairment; the carrying value approximates their fair value.
TRADE PAYABLES
These liabilities are mainly short term in nature with the carrying value approximating the fair value.
LOANS AND BORROWINGS
Loans and borrowings have a floating interest rate. Fair value is estimated using the discounted cash flow model based on current market
interest rate for a similar product; the carrying value approximates their fair value.
FAIR VALUES
Gentrack Group’s financial instruments that are measured subsequent to initial recognition at fair values are grouped into levels based on
the degree to which their fair value is observable:
•Level 1 – fair value measurements derived from quoted prices in active markets for identical assets.
•Level 2 – fair value measurements derived from inputs other than quoted prices included within level 1 that are observable for
the asset or liability, either directly or indirectly.
•Level 3 – fair value measurements derived from valuation techniques that include inputs for the asset or liability which are not
based on observable market data
.
There have been no transfers between levels or changes in the valuation methods used to determine the fair value of Gentrack Group’s
financial instruments during the period. As at 30 September 2020 Gentrack Group has nil of level 3 financial instruments. In 2019 Gentrack
Group had $2.5m in level 3 financial instruments relating to a call/put option for the acquisition of Blip Systems, this financial instrument
was contingent consideration and was settled in December (2019: $2.5m). Please Refer to note 33 of the 2018 Annual Report for further
information on the Blip Systems acquisition.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS/40
8.5 FINANCIAL INSTRUMENTS (CONTINUED)
FINANCIAL INSTRUMENTS BY CATEGORY
2020
NZ$000
2019
NZ$000
FINANCIAL ASSETS MEASURED AT AMORTISED COST
Cash and cash equivalents 19,321 8,626
Trade and other receivables
18,951 31,279
38,272 39,905
FINANCIAL LIABILITIES MEASURED AT AMORTISED COST
Loans and borrowings (2,536) (4,450)
Trade payables
(1,803) (3,742)
FINANCIAL LIABILITIES MEASURED AT FAIR VALUE
Financial Liabilities - (2,451)
(4,339) (10,643)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS/41
9.OTHER INFORMATION
9.1 LEASE ASSETS AND LEASE LIABILITIES
RECOGNITION AND MEASUREMENT OF GENTRACK GROUP’S LEASING ACTIVITIES
Gentrack Group predominantly leases property for fixed periods of 1-12 years and may have extension options. These
extension options are usually at the discretion of Gentrack Group and are included in the measurement of the lease asset if
management intends to exercise the extension. Lease terms are negotiated on an individual basis and contain a variety of
terms and conditions. However, these lease agreements do not impose any covenants.
Prior to 1 October 2019, leases of property, plant and equipment were classified as either finance or operating leases. Payments made
under operating leases (net of any incentives received from the lessor) were charged to profit or loss on a straight-line basis over the
period of the lease.
From 1 October 2019, leases are recognised as a right of use asset (lease asset) and a corresponding lease liability at the date at which the
leased asset is available for use. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to
profit or loss over the lease period. The lease asset is depreciated over the shorter of the asset’s useful life and the lease term on a
straight-line basis.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of
the following lease payments:
• fixed payments (including in-substance fixed payments), less any lease incentives receivable
• variable lease payments that are based on an index or a rate
• amounts expected to be payable by the lessee under residual value guarantees
• the exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and
• payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.
The lease payments are discounted using the lessee’s incremental borrowing rate, being the rate that the lessee would have to pay to
borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions.
Lease assets are measured at cost comprising the following:
• the amount of the initial measurement of lease liability
• any lease payments made at or before the commencement date less any lease incentives received
• any initial direct costs, and
• restoration costs.
See section 1 for more information on adjustments recognised on adoption of NZ IFRS 16 Leases, practical expedients applied and the
impact of first-time adoption of NZ IFRS 16 on these financial statements.
Key movements related to the lease assets and lease liabilities are presented below:
LEASE ASSETS
2020
NZ$000
Balance at 1 October 2019, due to first time adoption of NZ IFRS 16 12,671
Additions during the year -
Depreciation charges (2,350)
Exchange differences 17
Lease assets at 30 September 10,338
Property 10,302
Office equipment 36
Lease assets at 30 September 10,338
Office equipment includes Coffee Machines and Printer/Copiers.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS/42
9.1 LEASE ASSETS AND LEASE LIABILITIES (CONTINUED)
LEASE LIABILITIES
2020
NZ$000
Balance at 1 October 2019, due to first time adoption of NZ IFRS 16 17,620
Leases entered into during the period -
Principal repayments (2,457)
Exchange differences (36)
Lease liabilities at 30 September 15,127
Less than one year 2,692
One to five years 5,229
More than five years 7,206
Lease liabilities at 30 September 15,127
LEASE EXPENSES
2020
NZ$000
Depreciation charges 2,351
Finance charges 931
Lease expenses 3,282
9.2 AUDITORS REMUNERATION
2020
NZ$000
2019
NZ$000
KPMG – audit fees 517 537
KPMG – review fees 116 43
KPMG – taxation services
221 177
Entrust – audit fees
6 7
Total fees paid to auditor(s)
860 764
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2020
NOTES TO THE FINANCIAL STATEMENTS/43
9.3 KEY MANAGEMENT PERSONNEL AND RELATED PARTIES
Key management personnel are defined as those persons having authority and responsibility for planning, directing and controlling
the activities of Gentrack Group, directly or indirectly, and include the Directors, the Chief Executive, their direct reports. The
following table summarises remuneration paid to key management personnel.
2020
NZ$000
2019
NZ$000
Salaries, bonus and other benefits 4,157 3,466
Share-based payments - 261
Directors' fees
386 422
4,543 4,149
Gentrack Group’s Directors are also directors of other companies. During the year ended 30 September 2020 no transactions have
occurred between Gentrack Group and any of these companies.
Some of the Directors and key management personnel are shareholders in Gentrack Group Limited. Gentrack Group does not transact
with the Directors or key management personnel, and their related parties, other than in their capacity as Directors, consultants, and
employees. Refer to note 2.4 for more information on other related parties.
9.4 OTHER DISCLOSURES
CAPITAL COMMITMENTS
There are no capital commitments at 30 September 2020 (2019: $Nil).
CONTINGENCIES
ASB New Zealand has provided guarantees of $0.9m (2019: $0.9m) on behalf of the Gentrack Group, these guarantees are in place for
software implementation projects, property leases and exchange listings.
EVENTS AFTER BALANCE DATE
There were no material events after balance date.
On 25 November 2020, the Gentrack Group Board determined that no final dividend will be paid out for the 2020 financial year (2019:
$3.0m).
---
Copyright © 2020. This document is the intellectual property of Gentrack. The intended recipient may use this information only for the purpose for which it was
supplied, including copying and archiving for internal use. It may not be disclosed to third parties without the prior written consent of Gentrack.
GENTRACK GROUP LTD (GTK)
FY20—FULL YEAR RESULTS
AS AT 30 SEPTEMBER 2020
DISCLAIMER
This presentation may contain forward-looking statements. Forward-looking statements often
include words such as ‘anticipate’, ‘expect’, ‘plan’ or similar words in connection with discussions of
future operating or financial performance.
The forward-looking statements are based on management’s and directors’ current expectations and
assumptions regarding Gentrack’s business and performance, the economy and other future
conditions, circumstances and results. As with any projection or forecast, forward-looking
statements are inherently susceptible to uncertainty and changes in circumstances. Gentrack’s actual
results may vary materially from those expressed or implied in its forward-looking statements.
This presentation includes audited financial information for the full year ended 30 September 2020.
All figures are shown in NZ$.
2
INVESTOR BRIEFING AGENDA
•CEO Introduction: Gary Miles
•Financial Results: James Spence
•Forward-focus: Gary Miles
•Q&A
3
CEO INTRODUCTION: GARYMILES
Experience:
•25 years in B2B software/services leadership
•Founded, ran and exited two successful companies
•Served on the executive team at Amdocs (DOX) – global leader
Turn around
Technology
infusion
Innovatingwhile
operating
Customer success
andgrowth
Why Gentrack:
Track Record:
Great customers in
dynamic, early
adopter countries
Proven capabilities
in B2B / B2C across
water and energy
A global industry
transforming at pace
Technology will play
a pivotal role in this
transformation
4
James Spence
CHIEF FINANCIAL OFFICER
FINANCIAL RESULTS
5
5
FY20 – FINANCIAL HEADLINES
1
EBITDA: Earnings before depreciation, amortisation, impairments and non-operating expenses related to acquisitions.
2
Adjusted NPAT - Underlying NPAT adjusted for the impairment of Goodwill and intangible assets
6
EBITDA
N PAT
NET CASH
REVENUE
$100.5m
Down 10% on FY19
$12.1m
Down 51% on FY19
$16.8m
Up 263% on FY19
ADJUSTED
2
$2.4m
Down 75%
on FY19
1
ARR
STAT U TO R Y
-$31.7m
Down from
$3.3m in FY19
$81.3m
Up 4.9% on FY19
Improved working capital resulting in strong cash generation
and balance sheet position at year-end
Completed a cost-out process in February/March – lower H2
costs by $3.2m on H1
ARR and CMRR Growth vs FY19 (4.9% and 18.3% respectively)
Our Airports business (‘Veovo’) remains profitable despite
industry downturn.
•Total FY20 revenue down on reduced project revenues
•Recurring revenue growth held back by UK supplier
insolvencies and losses
•Reduction in revenue driving lower profitability, with partial
improvement in H2 due to cost reductions
•Impairments of $34.5m reflecting uncertain outlook.
NZ$’m‘000
FY19FY20FY19FY20FY19FY20
REVENUE
88.281.823.518.7111.7100.5
Personnel Costs55.557.011.011.766.568.7
R&D Capitalised(5.0)(0.3)(0.1)0.0(5.1)(0.3)
Other Costs17.714.97.85.125.520.0
EBITDA
20.010.24.81.924.812.1
Depreciation and Amortisation(9.4)(12.4)
Acquisition and related costs0.40.9
Impairment of goodwill and intangible assets(14.6)(34.5)
Net Finance Expense(0.8)(0.4)
Income Tax(3.7)2.6
REPORTED NET PROFIT/(LOSS) AFTER TAX
1
(3.3)(31.7)
•All segments remain profitable; H2 run-rate
improved
•Comments on revenue/opex/impairments
on subsequent slides
•Other costs lower due to COVID, and cost
saving measures, + impact of IFRS16
•Conservative approach to R&D
capitalisation in FY20
•Depreciation and amortisation higher on
adoption of IFRS16
•Finance expense minimised reflecting
strong balance sheet position.
1
Underlying EBITDA being earnings before depreciation, amortisation, impairments and non-operating expenses related to acquisitions.
EBITDA is a non-GAAP measure – refer to slide 24 for a reconciliation to reported net profit.
2
Adjusted NPAT - Underlying NPAT adjusted for the impairment of Goodwill and intangible assets
AIRPORTSUTILITIES
GROUP
GROUP PROFIT AND LOSS
7
2.8
8.0
22.7
54.7
3.1
7.1
22.6
49.0
Rest of World
New Zealand
Australia
United Kingdom
40.1
47.1
27.9
23.8
20.2
10.9
Total Revenue
$81.8m
Down 7.3% on FY19
Annual Recurring
Revenue
$70.9m
Up 4.3% on FY19
87% of total utilities revenue
UTILITIES – GROWTH IN RECURRING REVENUES
•Despite the Utilities segment deemed as ‘essential services’,
worldwide uncertainty has led customers to delay
committing to large transformational projects, resulting in a
decline in non-recurring project revenue year on year.
UTILITIES REVENUE FY19 - FY20(NZ$m‘000)
UTILITIES REVENUE BY GEOGRAPHY FY19 vs FY20 (NZ$m ‘000)
Committed Monthly Recurring
Revenues (CMRR)
Non-contracted Recurring
Revenues (TRR)
1
Non-recurring
Revenues (NRR)
FY19FY20
CMRR
Up 17.5%
on FY19
FY20
FY19
•Utilities has experienced growth in Committed Monthly
Recurring Revenue (CMRR), up 17.5% on FY19
•Driven by new business wins in the UK and Australia and increases in meter
points for existing UK customers
•Growth offset by some UK supplier insolvencies and losses.
•Non-recurring Revenues down due to the completion of large
projects in UK and Australia
1
Evolve revenues shown in FY19 as CMRR have been restated above as Non-contracted/Transactional Recurring Revenues (TRR). This is due to the mix of
subscription and service revenues associated with our assurance offering in FY20.
8
$81.8m
$88.2m
8.2
4.6
4.5
1.4
9.9
7.8
3.6
2.2
Europe
North
America
Oceania
Rest of
World
7.9
9.6
1.7
0.8
13.9
8.3
AIRPORTS REMAIN PROFITABLE
AIRPORTS REVENUE FY19 -FY20 (NZ$m‘000)
Total Revenue
$18.7m
Down 20% on FY19
Annual Recurring
Revenue
$10.4m
Up 8.8% on FY19
56% of total airports revenue
•Pandemic impact on Aviation has been dramatic during FY20. At the
worst, airports temporarily closed. By September 2020, IATA report
passenger numbers are still down 80%+.This has had a significant
effect on all our airports customers, with unprecedented cost savings
across the industry
•This has led to delayed signing of contracts, now being pushed to
FY21 and FY22 by our customers.
•Veovohas been able to secure new customers in Sweden,
Australiaand Mexico
•Recurring revenues have been resilient thanks to the criticality
ofVeovo’ssystems to airport operations
•Pre-Pandemic “go-live” of projects in Florida and New
Yo rkstrengthened recurring revenues
•Completion of major projects in North America and the UK has
meant a reduction in NRR as new contracts have been delayed
in to FY21 and FY22 by the pandemic.
AIRPORTS REVENUE ANALYSIS FY19 -FY20
(NZ$m ‘000)
CMRR
Up 22%
on FY19
FY20
FY19
FY19FY20
1
Ports of New York and New Jersey revenues for FY19 have been reclassed from Oceania to North America
1
9
Committed Monthly Recurring
Revenues (CMRR)
Non-contracted Recurring
Revenues (TRR)
Non-recurring
Revenues (NRR)
$18.7m
$23.5m
41.6
45.3
45.8
42.6
OVERALL EXPENDITURE DOWN IN H2
GROUP COSTS – FY19 - FY20 ANALYSIS (NZ$m ‘000)*
•H1 FY20 increase in opex
following hiring in FY19/early FY20
•Action taken in March 2020 led to lower
personnel costs in H2: -$2.1m
•Additional cost savings due to COVID,
and cost saving measures
•R&D capitalisation minimal in FY20 –
conservative approach
•Further cost measures under review in FY21,
with investment required in some areas.
GROUP COSTS – H1 20 – H2 20 ANALYSIS (NZ$m ‘000)*
Gentrack Costs HoHFY19-20 (NZ$m ‘000)*
H1 FY19
H2 FY19H1 FY20
H2 FY20
Capitalised Development Costs (NZ$m ‘000)
$3.7m
FY18
$5.1m
FY19
$0.3m
FY20
*IFRS 16 came into effect 1/10/19 for Gentrack and has a 6 month impact of circa $1.44m –this is reflected from H1 FY20
10
ASSET WRITE-DOWNS
•Rationalisation of previously capitalised software
•Blip: as per H1, the impact of COVID-19 and ongoing uncertainty
onBLIP business,full impairment of the $10.7m intangible asset
carrying value in FY20
•Utilities: partial write-down of goodwill taken due to uncertainty.
Goodwill/other
($4.5m)
Capitalised Software
NZ$m
Intangible Asset
($10.7m)
($34.5m)
Blip
($19.3m)
Utilities
11
STRONG CASH FLOW IN YEAR
•FY20 net cash generation of $12.2m driven by focus on management of
receivables and cost control measures
•Capitalisation significantly reduced in FY20: $0.3m
•Low utilisation of $20m debt facility (maturity March 2022)
•Improvement in collections, primarily from UK business
•Y/E net cash position of $16.8m provides liquidity and scope for investment.
EBITDA TO NET CASH FLOW FY20 (NZ$m ‘000)
$19.3m
$8.6m
$2.5m
$4.0m
$16.8m
$4.6m
12
OUTLOOK REMAINS
UNCHANGED
•We will not be providing further FY21 guidance at this stage
•The company continues to see market opportunities and will invest
to provide market-leading solutions for our customers. We will also
continue to invest in new skills and the development of our people
in line with our tech strategy
•With upward pressure on costs as new skills are recruited, and
increased competitive intensity, it is expected that the full year
EBITDA
1
run rate for FY21 will be below that of H2 FY20
•This may potentially reduce FY21 profitability closer to break-even
depending on levels of future product investment and other factors.
Planning in relation to our product investment strategy is ongoing.
•A further update will be provided at the Annual Meeting in
February.
1
Underlying EBITDA being earnings before depreciation, amortisation, impairments and non-operating expenses related to
acquisitions.
13
FORWARD-FOCUS
Gary Miles
CHIEF EXECUTIVE OFFICER
14
NEW LEADERSHIP
Experienced
Executive Team
New Board
appointments
Andy Green – ChairNick Luckock
Fiona OliverDarc Rasmussen
Stewart Sherriff
15
A SNAPSHOT OF OUR CURRENT MARKETS
Highly dynamic market as investment in renewables
and system modernisations will shape global trends
Ongoing financial pressures
on service providers
Increased GTK
competition
NZ
AU
GB
New tenders for system modernisation
Service Provider consolidations and
failures (SOLRs) continue
Remains primarily regulated with legacy systems
Introduction of metered services, improvement of CX
and efficiency pressures beginning to drive change
Metered services and need to automate are
triggering tenders for system modernisation
Contested (B2B) water transforms while
larger regulated market (B2C) is static
New tenders for system modernisation
Regulated, fragmented and still
Passenger traffic and airport revenues down (e.g.
80% in many cases) while airports focus on costs
Re-prioritised
transformation projects
Focusing on essential
services
Airport operational systems are deemed
an essential service
Passenger flow systems have a role to play
in the COVID era
NZ
AU
GB
16
MY ASPIRATIONS FOR GENTRACK
3
Accelerate the industry's move to the
cloud and automated operations
Lead the revolution to
Cleantech
Build, deploy and operate our solutions
around the world as the industry
deregulates andtransforms.
Be a place of choice for our customers,
shareholders and employees
17
Constantly Innovating
Leading Globally with a Full
Accountability Model
A Technology First Company
As a Customer and People
Centric Organisation
OUR PRIORITY –
RETURN TO GROWTH
•Improve customer service and profitability for existing
energy and water customers
•Maintain profitability and our position as a loyal,
dependable supplier for airports customers
•Roll out new solutions to support the dynamic
cleantech initiatives of our customers
•Win new business and strengthen pipeline – several
ongoing tenders
•Accelerate our investment in new tech and skills
...while defining a longer-term growth strategy
18
Copyright © 2020. This document is the intellectual property of Gentrack. The intended recipient may use this information only for the purpose for which it was
supplied, including copying and archiving for internal use. It may not be disclosed to third parties without the prior written consent of Gentrack.
Q&A
19
Copyright © 2020. This document is the intellectual property of Gentrack. The intended recipient may use this information only for the purpose for which it was
supplied, including copying and archiving for internal use. It may not be disclosed to third parties without the prior written consent of Gentrack.
APPENDICES
20
Period NZ$m
12 Months
30 Sep 19
12 Months
30 Sep 20
Reported net (loss)/profit after tax
(3.3)(31.7)
Add: Net finance expense
0.80.4
Less: Income tax (benefit) / expense
3.7(2.6)
Add: Depreciationand amortisation
9.412.4
Less: Revaluation and acquisition related liability
(0.4)(0.9)
Add: Impairment of goodwill and intangible assets
14.634.5
EBITDA
24.812.1
GAAP TO NON-GAAP PROFIT RECONCILIATION
21
22
NZ$mFY19FY20
FY20 Constant
Currency
2
Difference∆ %
Revenue111.7100.598.1(2,434)-2%
Operating Costs
86.988.486.4
(2,012)-2%
EBITDA
1
24.8 12.111.7
(422)-3%
Statutory NPAT
(3.3) (31.7) (31.3)
403-1%
1.Underlying EBITDA, being earnings before depreciation, amortisation, impairments and non-operating expenses related to
acquisitions. EBITDA is a non-GAAP measure – refer to slide 21 for a reconciliation to reported net profit.
2.Based on FY19 exchange rates applied to FY20 actuals
FY20 ON A CONSTANT CURRENCY BASIS
23
END OF YEAR GLOBAL HEADCOUNT
538
FY18
557
FY19
489
FY20
-68 on
FY19
•FY20 headcount reduction resulting from the cost review
process across the global business in February/March 2020
•Ongoing recruitment for new skills globally to support our
technology programme
We kept our people safe and actively engaged with
customers, adapting as they evolved with the social
impacts of the pandemic.
We enabled our customers to provide hardship
support and innovative tariffs to customers
impacted by the pandemic
Our people and our technology enabled utilities
and airports to continue operating as providers of
essential services
We delivered fully remote technical, business and
project services to customers globally
COVID-19: SUPPORTING OUR
CUSTOMERS WITH PROVEN TECH
24
CORPORATE AND SOCIAL RESPONSIBILITY
IN THE COMMUNITY
This year our teams globally have supported various community initiatives,
fundraising for community causes including Gumboot Day to raise awareness
of mental illness and suicide, Pink T-shirt day to make a stand against bullying
and Movemberfor men’s mental health, and much muchmore! Our people
are taking the time to DO GOOD in our communities.
DO GOOD
We care about doing
honest business that is
good for our customers,
families, communities and
the planet.
SUSTAINABILITY
Just as our customers live and breathe sustainability,
we too are doing our part for the environment through
our global sustainability programme -Project Gaia. Gaia,
translated as “Mother Earth”, frames the various initiatives in
the business targeting our environmental footprint and how we
can play a greater role in the energy and water revolution.
HEALTH AND SAFETY
The health and safety of our people is paramount. They have
after all adapted and provided the platform in what has been
an exceptional year, to ensure we can support our customers
throughout COVID. This year we’ve remained focused on their
wellbeing and mindfulness through our global Wellness
Programme and remain committed to keeping them safe so they
can continue to innovate and deliver their best.
DIVERSITY AND INCLUSION
As a global business, we are naturally diverse. This year
we’ve taken steps to ensure that D&I remains a
key part of our culture and values. It has shaped
how we recruit our people globally, how we
celebrate our diversity and ensured that
our people know the real value of
diverse thinking across our business.
25
Copyright © 2020. This document is the intellectual property of Gentrack. The intended recipient may use this information only for the purpose for which it was
supplied, including copying and archiving for internal use. It may not be disclosed to third parties without the prior written consent of Gentrack.
WWW.GENTRACK.COM
26
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.
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